Existing Home Sales Tank This Summer: Fact vs Fiction

by Dave Kranzler, Investment Research Dynamics: Existing home sales declined nearly 2% in June from May on a SAAR basis (Seasonally Adjusted Annualized Rate). (SAAR is the statistically manipulated metric used by industry organizations and the Government to spin bad monthly economic data into an annualized metric that hides the ugly truth).

Here is the NAR-spun fiction: “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget…” – Larry Yun chief “economist” for the National Association of Homebuilders.

This has been Yun’s narrative since home sales volume began to decline last year. His headline mantra of low inventory is mindlessly regurgitated by Wall Street and the financial media. But here’s what the truth looks like

Going back to 1999, this data sourced from the Fed, who sourced it from the NAR, shows an inverse correlation between inventory and sales. In other words, low inventory drives sales higher. Conversely, as inventory rises, sales drops. You’ll note that the chart does not go past 2015. This is because, for some reason, the Fed purged its database of existing home inventory prior to June 2016. There’s a gap in inventory between mid-2015 and mid-2016. However, there is this

I hate to call Larry Yun a “liar” because it sounds unprofessional. But what else am I supposed to call him when the data completely contradicts the narrative he shovels from his propaganda port-o-let into the public domain? I have no choice.

AS you can see, from 1999 to mid-2015 and from mid-2016 to present, inventory and sales are inversely correlated.

This has been the worst selling season for the housing market’s peak sales months since 2011. In 2011 the Fed was dumping trillions into the housing market and mortgage finance system. To make this morning’s report worse, mortgage rates have been declining at a steep rate since the end of December. Near-record low rates, combined with near-zero percent down payment Government-guaranteed mortgages combined with the lowest credit-approval standards since 2007 combined with the peak selling months should have catapulted home sales much higher this year.

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