About the Author
Lee Adler is the editor and publisher of the Wall Street Examiner, and the Wall Street Examiner Professional Edition, a membership based newsletter for sophisticated traders and investors. He also runs the world renowned Stool Pigeons Wire message board at Capitalstool.com, where his alter ego, Dr. Stepan N. Stool the stock proctologist, informs, entertains, and annoys readers.
NAR data for May confirms earlier data from CoreLogic, Dataquick, and Department of Numbers.com that housing prices continued to make new 12 month highs in May and that, contrary to the mainstream media portrayal, the housing rebound is not “uneven” or slowing in any way.
Below is the full unexpurgated PR from the NAR. While it is spin, there are some interesting points. It’s not all a pack of lies. My analysis of housing data from multiple sources essentially concurs with the views expressed by the NAR and not the mainstream media hair-on-fire, “sky is falling” hysteria. Is it a miracle? Not really. When the news really is good, the industry flacks and shills coincidentally do happen to be telling the truth, while the mainstream reporting gets locked in on universally negative hype. In the immortal words of the legendary Joe Kuharich, “It is rare but not unusual.”
My problem, as always, is with the exclusive reporting of falsified data, also known as “seasonally adjusted” data. The NAR makes the actual data (commonly known called “not seasonally adjusted” instead of “actual”) available, but doesn’t publicize it. Everybody ignores that data because they refuse to take the time to do the most simple, basic analysis of comparing the present with the past. Instead they focus on the seasonally adjusted fiction, which frequently substantially misrepresents actual conditions. That’s what happened this month. Not even the NAR appears to realize that.
This month’s data stacks up like this. The actual median sale price of $182,600 in May was up 7.2% on an annual basis and 5.1% month to month. That compares with a similar 5.1% gain in May of 2011. The pace of recent gains was maintained in May. Both years were better than the 2009 May gain of 1.3% which was right around the time that the market apparently began to bottom out.
The annual housing price cycle normally peaks in July, although last year the high was in June. This year’s level already exceeds the June 2011 peak of $175,500 and the July 2010 peak of $182,100. Stock market technicians would recognize the resulting price pattern on the chart as a breakout from a 4 year base pattern. Such breakouts usually correlate with major trend reversals. Concepts like that are likely foreign to the pompous ass academic and Wall Street shill conomists who populate the mainstream media, which may be one of the reasons most of them never understand what is going on until after the fact when it’s too late to do any good.
Meanwhile, good marketable inventory has declined sharply, with current inventory of 2,490,000 listings down by 640,000 or 20.4% from last year. I have for the past 2 years repeated explained why “shadow inventory” is no threat. If you are not familiar with that, see some of my past housing pieces.
Likewise while supply is shrinking, demand is picking up. The volume of closed sales has broken out to a higher high than last year, a month ahead of the usual June peak. May saw 444,000 closings, a gain of 13.6% above the May 2011 level, and already well above the June 2011 peak of 385,000. The month to month gain of 44,000 sales was much stronger than the 16,000 gain in May of 2011. It was also stronger than the average May gain of 37,000 for the previous 6 years.
I cannot fathom how the seasonal adjustment (SA) hocus pocus could turn this number into a negative. What a bunch of crap. If you look at the actual numbers instead of the SA fiction, any way you slice it, these were good numbers.
This is a far cry from how mainstream media outlets characterized the data, like Bloomberg’s totally negative headline, Sales Of Existing U.S. Homes Fell In May To 4.55 Million, and lead-in, “Sales of previously owned U.S. homes declined in May, showing an uneven recovery in residential real estate.” This is just totally mindless bullshit. It is false and misleading. If anything, the data was even a little better than the trend. The housing rebound is not “uneven.” It is continuing apace. It may be uneven in the geographical sense. In essence, all real estate is local. But there are more markets doing consistently better in recent months than not. And there was absolutely nothing in the May data to contradict that.
NAR press release below.
See the latest data on the Wall Street Examiner’s permanent housing chart page, which is updated whenever new data becomes available. You can bookmark that page for future reference.
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NAR Press Release:
WASHINGTON (June 21, 2012) – Limited supplies of housing inventory held back existing-home sales in May, but sales maintained a strong lead over year-ago levels and home prices are on a sustained uptrend in all regions, according to the National Association of Realtors®.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April, but are 9.6 percent above the 4.15 million-unit pace in May 2011.
Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. “The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring,” he said. “Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier.”
There are broad-based shortages of inventory in the lower price ranges in much of the country except the Northeast, and in the West supply is extremely tight in all price ranges except for the upper end. “Realtors® in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property,” Yun added. Widespread inventory shortages also are found in much of Florida.
Total housing inventory at the end of May slipped 0.4 percent to 2.49 million existing homes available for sale, which represents a 6.6-month supply2 at the current sales pace; there was a 6.5-month supply in April. Listed inventory is 20.4 percent below a year ago when there was a 9.1-month supply. Unsold inventory has trended down from a record 4.04 million in July 2007; supplies reached a cyclical peak of 12.1 months in July 2010.
“The recovery is occurring despite excessively tight credit conditions and higher downpayment requirements, which are negating the impact of record high affordability conditions,” Yun said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to a record low 3.80 percent in May from 3.91 percent in April; the rate was 4.64 percent in May 2011; recordkeeping began in 1971.
The national median existing-home price3 for all housing types rose 7.9 percent to $182,600 in May from a year ago, the third consecutive month of year over year price gains. The last time there were three back-to-back price increases from the same month a year earlier was from March to May of 2006. “Some of the price gain results from a shrinking share distressed homes in the sales mix,” Yun explained.
Distressed homes4 – foreclosures and short sales sold at deep discounts – accounted for 25 percent of May sales (15 percent were foreclosures and 10 percent were short sales), down from 28 percent in April and 31 percent in May 2011. Foreclosures sold for an average discount of 19 percent below market value in May, while short sales were discounted 14 percent.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, offers advice to buyers in markets with limited supply. “We are hearing a lot about multiple bidding and quick sales in areas with tight supply, with competition between first-time buyers and cash investors, who have a significant advantage,” he said.
“It’s extremely important to listen to the advice of your agent and perform all the due diligence that you would normally do in a more balanced market, such as making offers contingent upon a satisfactory home inspection,” Veissi said.
First-time buyers accounted for 34 percent of purchasers in May, compared with 35 percent in April and 36 percent in May 2011.
All-cash sales slipped to 28 percent of transactions in May from 29 percent in April; they were 30 percent in May 2011. Investors, who account for the bulk of cash sales, purchased 17 percent of homes in May, down from 20 percent in April and 19 percent in May 2011. “These figures reflect a modest increase in traditional repeat home buyers in May,” Yun said.
Single-family home sales slipped 1.0 percent to a seasonally adjusted annual rate of 4.05 million in May from 4.09 million in April, but are 10.4 percent above the 3.67 million-unit level in May 2011. The median existing single-family home price was $182,900 in May, up 7.7 percent from a year ago.
Existing condominium and co-op sales fell 5.7 percent to a seasonally adjusted annual rate of 500,000 in May from 530,000 in April, but are 4.2 percent higher than the 480,000-unit pace one year ago. The median existing condo price was $180,000 in May, which is 8.8 percent above May 2011.
Regionally, existing-home sales in the Northeast fell 4.8 percent to an annual level of 590,000 in May but are 7.3 percent higher than May 2011. The median price in the Northeast was $250,700, up 3.8 percent from a year ago.
Existing-home sales in the Midwest rose 1.0 percent in May to a pace of 1.04 million and are 19.5 percent above a year ago. The median price in the Midwest was $147,700, up 6.4 percent from May 2011.
In the South, existing-home sales slipped 0.6 percent to an annual level of 1.78 million in May but are 9.2 percent higher May 2011. The median price in the South was $159,700, up 7.8 percent from a year ago.
Existing-home sales in the West declined 3.4 percent to an annual pace of 1.14 million in May but are 3.6 percent above a year ago. The median price in the West was $233,900, up 13.4 percent from May 2011. “The sharp price increase in the West results largely from more sales at the upper end of the market,” Yun explained.