Did U.S. home sales fall? That depends
We’ve actually gotten a big dose of economic news while nobody was looking last week, but there’s one piece of information in particular is worth a closer inspection at this time... an overview of last month’s home sales pace.
You may have already heard, but if not, the November new-home sales pace moved from 470,000 to a pace of 490,000 per year. That still missed estimates of 505,000 though. Earlier in the week, we heard the pace of existing-home sales slumped from 5.32 million to 4.76 million in November, also missing estimates of 5.3 million.
The news isn’t good on the surface, and with just a quick glance at the existing-home sales trend chart, it’s almost a little alarming. The more we look at the long-term data of both, however, the better we feel.
Last month’s existing home sales-pace plunge was rattling. Just for the record, though, the total number of home sales between new and existing houses in November - the unadjusted total - was better than the total of the two seen in November of last year. That’s an important detail to note. The “seasonal adjustment” is supposed to smooth out the data and make it reflect a discernible trend. This adjustment of the raw data, however, can sometimes skew the chart.
We can’t help but wonder if that’s what happened above, because when we look at the raw data for existing home sales below through last month compared to the annualizsed and seasonally-adjusted figure above, we’re not sure the two charts lead to the same conclusion. All the Novembers are marked with arrows.
Lastly, there’s the same version of the new-home sales charts. Looks like November is supposed to be the low point of the year here too, but even this most recent November is just another improvement on the prior November.
Perhaps that’s the long way of saying “I’m not sweating this week’s superficial lull in November home sales”. It’s also a warning that you have to be very careful about jumping to conclusions when the headlines reference data that’s been seasonally adjusted. (Source: SmallCap Network)