The Golden Truth: Today's New Home Sales Report For November: Complete Fiction

Tuesday, December 24, 2013

Today's New Home Sales Report For November: Complete Fiction

I'll have a lot more in-depth detail in a couple days, but suffice it to say that today's new home sales report, prepared and released by the Government's Census Bureau, goes beyond the bounds of all credibility.

Please note: the headline number is a seasonally adjusted annualized number. We have no idea how they statistically engineer that final number but there's no way it's even remotely accurate. To begin, the Government significantly revised higher the numbers originally reported for September and October. Does it make sense that October had new home sales that were higher than for June - June being the seasonally strongest month for home sales? It gets better. Based on the revised numbers for Sept/Oct plus today's number for November, the 3 month average for Sept-Nov was a 447,000 seasonally adjusted annualized rate. It exceeds the 3 month average for June- Aug by 44,000. Is it even possible for that to happen considering the strong seasonality of housing, with June-Aug being by far the strongest seasonal months? Sorry the numbers are not believable.

Layer onto that the Government shut-down, which seems to have affected every business statistic out there negatively except a few that are being reported by the Government. In addition, mortgage purchase applications have plunged over the last three months. Purchase applications have declined in 9 of the last 13 weeks. How can new home sales possibly be higher when 90% of all new homes are purchased using mortgages? If you take just the estimated actual number for November of 33k homes sold and simply annualize it, you get a 396,000 annualized rate. This would overstate the actual rate because November is typically a slow seasonal month. I have no idea where the Government's 464,000 estimate came from and I doubt anyone else does either.

Getting back to mortgage applications, here's a chart for purchase applications (source: Calculated Risk blog):

The Government wants us to believe that new homes sales increased despite that sharp fall off in applications for mortgages used to purchase new homes, which finance 90% of all new home sales. Finally, interest rates have been climbing steadily higher since early October. In fact, 30-yr fixed rates have spiked up from 4.10% at the end of October to their current 4.47%. And that rate is for a 20% down mortgage and perfect credit.

So I'll leave it up to you to decide if you think the Government new housing report is even remotely believable.

9 comments:

HalTuesday, 24 December, 2013
They now give lying awards in DC.
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AnonymousTuesday, 24 December, 2013
Lord knows that US government numbers are suspect to say the least. But you know, a sale is not contingent on a mortgage application if the buyer has cash. Could cash transactions explain some of the discrepancies?
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AnonymousTuesday, 24 December, 2013
You have entered another dimension of space and time, where numbers are reported at a speed which distorts all reality. Propaganda is the blue plate special and it is served monthly for your perusal. You have entered the U.S.S.A. zone.
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AnonymousTuesday, 24 December, 2013
Oh, Dave, how silly of you! You shouldn't have argued with that real estate moron. That was a sheer waste of time. Sheeple of this kind are beyond rescue. You should have said to that critter something like “You are absolutely a genius!", "Real Estate is an opportunity of one's life time!" or "Gold and silver are on the way to ZERO!" It's Christmas. You should be benevolent. You should have brought happiness to that critter.
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AnonymousTuesday, 24 December, 2013
Merry Christmas Dave!!
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AnonymousWednesday, 25 December, 2013
Global shipping service company Fedex has cut its full-year profit forecast, warning that the global economy is continuing to weaken.

The company, whose earnings are widely watched because of the number of countries it does business in said its net income for the first quarter had fallen 1% on last year to $459m.

Fedex said it expected annual profits to be about 10% lower than expected.

http://www.bbc.co.uk/news/business-19640127

Recoveeeeerrrrry!!!! YIPPIE!!!!!!
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Michael JacksonThursday, 26 December, 2013
After “End” of French Recession, GDP Goes Negative

"The French economy continues to struggle as third quarter GDP growth dropped back into negative territory just a few months after the nation’s finance minister proclaimed the end of the French recession based on a single quarter of positive GDP growth. Additionally, in line with weaker GDP, growth in French exports, which represent more than a quarter of GDP, went negative in the third quarter following a pop in the prior quarter. If there is to be hope for a French recovery, exports will likely need to reverse course."

http://www.businesscycle.com/ecri-reports-indexes/report-summary-details/economic-cycle-research-after-end-of-french-recession-gdp-goes-negative
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.