The real news in today's new-home sales information published by the Census Bureau is that September's previously reported 389,000 in seasonally adjusted annual sales was written down by over 5 percent to 369,000. Hmm -- The higher figure, aggressively touted as the highest in 2-1/2 years by the Associated Press and other establishment media outlets, was reported on October 24, just 13 days before Election Day on November 6. Now we learn that it was a mirage, and that the revised figure was merely the same as the number turned in four months earlier and barely above February. In fact, the new home market, portrayed throughout the summer and early fall as recovering somewhat nicely, merely treaded water. That trend continued in October, as annualized sales came in at 368,000. Imagine that.
To his credit, the Associated Press's Martin Crutsinger at least acknowledged the major prior-month revision in each of his first two paragraphs; however, the AP's headline writers ignored it. To Crutsinger's detriment, it's clear that he tried very hard to find someone who would pin a major portion of the blame for October's 0.3 percent drop on Superstorm Sandy. When he couldn't, he decided to take it on himself to make the point (bolds are mine):
US SALES OF NEW HOMES DIP 0.3 PERCENT IN OCTOBER
U.S. sales of new homes fell slightly in October and September sales were slower than initially thought. The October sales pace was dragged lower by steep declines on the East Coast, partly related to Superstorm Sandy.
The Commerce Department said Wednesday that new-home sales dipped 0.3 percent in October to a seasonally adjusted annual rate of 368,000. That's down marginally from the 369,000 pace in September, which was revised lower from an initially reported 389,000.
Sales fell a sharp 32.3 percent in the Northeast and nearly 12 percent in the South. The government said Sandy had a minimal effect on the housing data because it made landfall in the final days of the month. Still, the storm disrupted business activity from North Carolina to Maine. *
States outside the area affected by the storm fared better. Sales surged 62.2 percent in the Midwest and were up 8.8 percent in the West.
"Sales probably would have been slightly stronger without the hurricane," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics. "Still, the report was disappointing."
* - Translation: "Darn it, it's mostly Sandy's fault, even if I can't find anybody else who will say that for me!"
Let's look at both versions of the data for the past nearly years, first the seasonally adjusted annual figures, followed by the raw monthly numbers:
On an annualized seasonally adjusted basis, after a step-up through fall 2011 and early winter 2012, new home sales have been flat as a pancake, and have trailed the pathetic levels seen in 2009 during the past six consecutive months. At the time three years ago, many people, particularly in the press, thought or at least hoped we had hit bottom. Raw sales before seasonal adjustment tell a similar story, trailing 2009 during the past five consecutive months.
By the way, here is how the originally reported sales figures for the three months before October and the figures above compare: - September -- 369,000 above vs. 389,000 originally reported; drop of 20,000.
- August -- 366,000 above vs. 373,000 originally reported; drop of 7,000.
- July -- 366,000 above vs. 372,000 originally reported; drop of 6,000.
That's a cumulative third-quarter miss of 33,000.
Anyone foolish enough to factor in the idea that the homebuilding industry was on a path to meaningful recovery into their decision to reelect Barack Obama was clearly acting on shaky data. That should also be a news story, and won't be.
Cross-posted at BizzyBlog.com.
