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Existing Home Sales Surge In September (Thanks To Massive Seasonal Adjustment)
September Existing Home Sales fell 6.5% from August, but you will not see that in the headlines as after adjustments for seasonals, existing home sales actually rose in September by 4.7%, bouncing back from a 5.0% revised lower drop in August (and beating expectatations of a mere 1.5% rise). 2015 has seen unprecedented volatility in the NAR's reported data, but a they note, "Unfortunately, first–time buyers are still failing to generate any meaningful traction this year."
Something has changed in 2015 - look at the relative volatility of the swings in existing home sales...
And highlighted here for September...
As NAR notes,
"Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent–up sellers realizing the increased equity they've gained from rising home prices and using it towards trading up or moving into a smaller home," says Yun. "Unfortunately, first–time buyers are still failing to generate any meaningful traction this year."
Which is no surprise, given home prices are accelerating again...
By region...
September existing–home sales in the Northeast jumped 8.6 percent to an annual rate of 760,000, and are 11.8 percent above a year ago. The median price in the Northeast was $256,500, which is 4.0 percent above September 2014.
In the Midwest, existing–home sales climbed 2.3 percent to an annual rate of 1.31 million in September, and are 12.0 percent above September 2014. The median price in the Midwest was $174,400, up 5.4 percent from a year ago.
Existing–home sales in the South rose 3.8 percent to an annual rate of 2.21 million in September, and are 5.7 percent above September 2014. The median price in the South was $191,500, up 6.2 percent from a year ago.
Existing–home sales in the West increased 6.7 percent to an annual rate of 1.27 million in September, and are 9.5 percent above a year ago. The median price in the West was $318,100, which is 8.0 percent above September 2014.
Charts: Bloomberg
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something happened...corruption happened
Data is always seasonally adjusted, otherwise you would see huge swings every time there is a report like this. The adjustment is designed to smooth the data. The numbers are still well above last years, up 5,6,8 and 11% on those regions quoted.
"The numbers are still well above last years"
Well I guess we better ignore those leading economic indicators, then....
http://www.zerohedge.com/news/2015-10-22/us-leading-economic-indicators-...
I looove the smell of pollyanna in the morning....smells like Troll victory....
"Data is always seasonally adjusted, otherwise you would see huge swings every time there is a report like this. The adjustment is designed to smooth the data. The numbers are still well above last years, up 5,6,8 and 11% on those regions quoted."
We know this shit nimrod.
All this lying bs is sbout is making the affirmitive action president look good.
Those numbers will be adjusted down in a few months when all the real data has been tallied but, you won't see that reported anywhere but Zerohedge and a few blogs. The NAR and their minions in the media can go fuck themselves.
There is a difference between smoothing and bending the curve. Ask them for their algorithm, which of course, your never going to see, just like China's magical, eternal 7% GDP.......
Skittle shitting unicorns in every barn!!! - Bernie
"Shit the rainbow", the Bern's campaign motto......
Gee, we the sheeple can't handle swings or the truth. Enjoy your chains Hitlery lovers.
can't imagine why prices increasing of 5% a year would drive off first time buyers who get 1% wage increases and have ZERO Saves....and are paid Zero for the savings they have. I will have to call Ben and he can tell me
I wonder if the govt would let me get away with seasonally adjusting my prior year income down every Apr 15.
Or do I first have to be a bankah?
want a seasonal adjustment??--try finding an "existing" on a nice slab--remove existing off slab during winter-(fire place fires work well) ---clean slab during spring cleaning season--find a used doublewide during summer months and move it on slab--build nice porch along the south side of doublewide in the fall -----move in during winter for seasonal adjusted price --say from $350,000 with high and increasing tax bill to a lower decreasing tax bill with a $35,000 price--
now thats seasonal adjustment you can learn to like--just saying--
A friend of mine who is a part-time Realtor told me new paperwork rules went into effect 10/01/15. She had nearly a normal year's worth of business in September, with sellers and buyers rushing to close deals before the new paperwork requirements went into effect. I believe the new rules limit the kinds of wheeling and dealing that can happen at closing, where a seller agrees to sweeten the deal somewhat in return for not having completed certain repairs/upgrades. As it was explained to me, it's the sort of rule that protects people who shouldn't be buying houses in the first place. I would never want the seller to make any repairs whatsoever. The seller has the incentive to do as cheap and shitty a job as possible, while I would want to pay to have the repairs done as well as possible, with far less consideration of cost.
I'm guessing October 2015 existing home sales will be miserable.
Do you have a link for that? I thought that real state agreements were different by state right?
Actually, I don't know. It was just a conversation with a friend, and I don't know much about it personally. Here's what I find:
From the NAR Website: http://bit.ly/1MVkYtt
From Fox Business, for us non-insiders: http://fxn.ws/1MVl1W8
I think this means the HUD-1 form and process changed. The effect, which I think my friend was talking about, was to prohibit a lot of the last-minute wheeling and dealing that can happen right before, and at, closing. I think the effect is to make everybody lock in at least 3 days before closing, since the new HUD-1 procedures force a 3-day window. That would be Federal, so it would apply nationwide, regardless of the myriad differences between states.
Again, I don't know what the hell I'm talking about, but I think this is what is new and has changed, and might have served to goose September sales. I hope it helps.
What is a seasonally adjusted home sale? You either bought a fucking house, or you didn't.
More government lies.
"It's a great time to buy a home."
I am trying to understand "seasonally adjusted" too! So I did an in-depth study on the subject. Maybe it was too hot to buy a house in June, so the sale was put off until September, but the contract was signed in August? It is theoretical, so a discrepancy of 1% to 75% has to be taken into account when calculating whether people buy houses at a particular time of year. The seasonal adjustment is also dependent on fuel prices, cold weather, the cost of grass, hookers, beer and interest rate fluctuations which can adversely affect the correct statistical information. So yes in reality it is "either you bought a fuckin house or you didn't", but as we live in an Alice in Wonderland World anything is possible. I hope this clears things up. Now it's time to smoke another joint!
https://en.wikipedia.org/wiki/Seasonal_adjustment
Thanks for the "clarification". Maybe they can just count the home sale multiple times, contract signing, loan approval, closing, MBS packaging, and eventual forclosure.
You should be working for Citi Bank or J.P Morgan!
I'm sorry - it was my fault. I thought about buying a house thousands of times in September - I guess they counted that.
There's never been a better time to (not) buy a home.™
A huge portion of the existing currency, both central-bank base money, and so-called 'commercial paper' is tied up in mortgages.
How much?
Too much!!!!!
You need to understand how the dollar - and all other currencies - are currently made.
They are 'made, printed, created' like this (US $ as example, and 1% coupon for simplicity):
1) Government issues a debt for $100 and provides to Federal Reserve.
2) Federal Reserve adds the $100 to 'Asset' column of the balance sheet.
3) Federal Reserve creates a $100 entry in the 'Liability' column of their balance sheet. Voila! $100 just came into existence!
4) First interest payment is due; government taxes $1, then pays $1 in interest; 'POOF!!!' $1 just went out of existence, leaving only $99 of circulating currency to pay the original debt of $100
5) Government issues debt for $1 (simplified...they would actually wait until the debt is near maturity and then write the new debt to be equal to $100 plus accumulated interest).
6) Federal Reserve does as before...creating $1 so that the original $100 debt is payable (but now there is a new, larger debt replacing it).
That Federal-Reserve produced money is called 'base money'.
But that's not the only source of dollars.
The government is going to spend that $100 it got from the Federal Reserve. When it does, a government contractor or employee is going to receive it. They will deposit it or spend it. Either way it will be deposited.
The deposit forms a reserve. In the US the Lawful 'Reserve Ratio' is 10%.
So the bank can loan out $90 of that money, and keep $10 as reserve. OR they could loan out $900 and keep all $100 as reserve.
In either case both the recipient(s) of the loan, and the original depositor are guaranteed 100% access to the money...which is (obviously) as impossible as two separate car-buyers driving the exact same car off the lot at the same time, each thinking he owns it.
By this method, the monetary base expands after the deposit by $90 to $900. EXCEPT that loaned-out money is also going to be deposited. The process will be repeated until the denominations are too small to loan. All of this is called 'commercial paper'. It is money in every sense. Except it exists only due to an accounting entry.
Because the largest consumer loans are mortgages, and the economy is 70% consumer, a HUGE PORTION OF THE CIRCULATING monetary base are tied up in mortgages.
When the mortgage defaults, it does not default only to its face value. It defaults to its value plus accumulated interest. This means that a $100K 30-year fixed loan at 5% only creates a $100K of cash at initiation. Just like the Central Bank does with Government debts.
Again this amount does not include the interest.
So, the value of that loan is actually $193,255.78. And that is the amount that will be sold to someone.
What does this mean?
It means that when a loan is created it only creates the face-value of the loan.
But when it defaults it destroys the face-value-plus interest of the loan.
The difference, $93,255.78 in this example, is money brought from the future to the present. When it disappears (POOF!) in default, that is $93,255.78 less money in the monetary base, that someone else requires to make the payment on THEIR loan.
That is why we have the term 'debt contagion'. It is because in a debt-based monetary system like ours, a SINGLE DEFAULT CAN CAUSE...not just encourage, but CAUSE, another loan to default.
Get it?
Each loan defaulting acts like a dominoe, knocking down the next loan....and so on, and so on, until all commercial paper is gone...and actually in deficit.
And then what?
Why, then there's not enough currency left for the government to make interest payments on its debts...and the contagion spreads through the Central Bank, until there are zero dollars in existence anywhere...but still a sizeable debt in dollars.
Get it?
It will not reach equilibrium, because we have no physical collateral backstopping the value of the currency.
If we did have such collateral, then once the collapsing commercial paper could not be paid, the bank would go bankrupt and the remaining balance of the loan would simply be written off. It could only ever collapse the currency to its percentage of commodity backing...traditionally 40% in the US. After that, the government pays in specie, which can't be discounted because it is a physical element easily authenticated, and not a promise.
The "Flexible Currency" in general, and the Federal Reserve in particular were created SPECIFICALLY TO TRANSFER THAT RISK OF DEFLATIONARY COLLAPSE FROM THE LARGEST BANKS TO THE CURRENCY ITSELF.
So, no it will not reach any equilibrium. It will collapse the currency.
How much?
Well, it depends on the real value of the actual physical collateral.
The Dollar, since at least 1971 - and really since 1933, is a theoretical construct...as I hope I've shown.
My claims of the reach of a deflationary collapse are going to be controversial. Many will dispute that the extra $93K of the example mortgage disappears.
But I say they are counting the $100K price as though it were a real price.
But it is not a real price, but a manipulated one. That price would be impossible if only real current production were available for loan.
The question of the hour is, "What's the difference between the fractionally-reserved-Federal-Reserve-manipulated-price and the real price?"
No one really knows.
But if the Gov't owns all the physical collateral it says it does (held in Fed custody) ...and that collateral is unencumbered, then I would expect that $100K to shrink down to between $1000-$2000 total. That is assuming it only collapses to about a 40% backing. If it collapses to a larger backing, then the value in dollars would be lower, with an absolute of about $800.
That is if all the collateral is there, and unencumbered.
The rest of the 'currency' out there bidding up prices is accumulated interest and fractionally reserved credit. And, yes, I am discounting the value of finished products that may be held in collateral...because their relative value is a function of the market, while an unfinished element on the periodic table simply is what it is.
I don't get it, month after month I see the same old homes for sale...It looks to me like they can't give most of the homes away moreless be actually get more for their worn out...
What I can't understand is houses were bought and sold decades ago without seasonal adjustments... what the F? This is all BS.