Spinning the Numbers

It seems every few months the National Realtor Association changes the methodology to show things are great. When the number suit them they change the whole game. Anytime there is a slight uptick in month-over-month numbers it seems NAR changes the equation. These numbers are reported and analyzed as year-over-year not month-over-month. The same thing happened this spring with an uptick in February numbers over January (see here). Here is a snippet from Seeking Alpha's great March explanation -

"Changes from [May] to [June] are measuring seasonal differences, not actual improvements in house sales." Can you imagine what it would be like if we reported retail sales from December to January this way? Headlines would misleadingly state: "Retail sales plummet 65%!" That is why with highly seasonal data series, the preferred methodology is to report year-over-year data -- not month-to-month variations.

Now to the Los Angeles Times article which makes the monthly uptick as a good news. The headline to the article screams Pending sales of homes climbed in June. Let's take a look -

Pending sales of previously owned homes unexpectedly rose in June as buyers swept up foreclosed and lower-priced properties.

The index of pending home resales rose 5.3% after a revised 4.9% decline in May, the National Assn. of Realtors said Thursday in Washington. A separate report showed that claims for jobless benefits jumped last week to a six-year high.

The record number of foreclosures has forced property values down enough to stir interest among buyers, helping to stabilize the market. Still, repossessions may keep mounting as stricter lending rules make it harder for owners to refinance, economists said.

...
The measure increased in all four regions of the country from May, led by a 9.3% gain in the South. Purchase contracts also rose 4.6% in the West, 3.4% in the Northeast and 1.3% in the Midwest.

Compared with a year ago, contract signings remained down in all regions.

Buried at the end of the article is that contract signings are still down in year-over-year analysis. The real way to analyze and understand the data. But instead of acknowledging normal seasonal fluctuations they are being spun to illustrate a narrative. The narrative is the NAR line that "Now is a great time to buy a home." Great for Realtors that keep that 6% commission regardless if the buyer keeps their house or not. Not so great for potential knife catchers.