Case Shiller Seasonal Adjustments
See, I say one nice thing about Housing, and I am immediately proven wrong.(heh)
Tim Iacono of The Mess That Greenspan Made points out that although the data showed the first monthly increase in three years, we should be wary of reading too much into the data this time of the year.
Why? Seasonal Adjustments wreak havoc with Case Shiller’s Index:
From April to May, the 20-city index rose 0.5 percent while the 10-city index rose 0.4 percent, however, you can see in the chart below that there is a strong seasonal component to the data, monthly price changes improving around this time of the year regularly – look for more of the same in next month’s report.
Bill at CR notes that “Seasonally adjusted, prices fell in 12 of the 20 Case Shiller cities.”
As always, the chart is revealing:
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Seasonal Adjustments
Source: The Mess That Greenspan Made
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See also: Case-Shiller House Price Seasonal Adjustment and Comparison to Stress Tests
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July 28th, 2009 at 11:44 am
The “Furs and Station Wagons” demographic paying up to move prior to the change of the school year. Corporate types who lack street smarts and who don’t know the first thing about negotiating, business, etc. Similar to this CPA sucker:
http://online.wsj.com/article/SB124873671770285097.html
I love how the broad couldn’t act on the insider info so she found another guy to front her the capital in the same dating service.
July 28th, 2009 at 11:49 am
If by ‘seasonal adjustment’ you mean that sales in the summer are traditionally higher than in the winter and that summer sales are often higher than spring sales, I would accept that as a good definition.
Education over time has learned me pretty good that year over year changes in a given month tell a better story than month to month changes. Maybe if the month to month sales number jumped a much better than expected (ha ha) percentage then that might say some good things about housing sales. Given the massive stimulus being applied towards housing, the dismal sales rate, and the continued job loss which implies more foreclosures to come, it still appears housing is buried in the reservoir end of a busy outhouse
July 28th, 2009 at 11:53 am
I said
and the continued job loss which implies more foreclosures to come, it still appears housing is buried in the reservoir end of a busy outhouse
addendum ….
From the perspective of housing … not a pretty sight when you look in any direction.
July 28th, 2009 at 11:57 am
But I would like to point out that this was before the stimulus had its chance to influence the numbers. The seasonal falls are likely to be affected by that $8000 down-payment assistance in a positive way. It will be interesting to see what happens, but I think the fall will bring big disappointments to the bears.
July 28th, 2009 at 12:00 pm
down market and decent volume …. sucker trap or suckers who bought due to an HFT inspired rally wising up and bailing while buyers still exist?
July 28th, 2009 at 12:04 pm
@DeDude: Really? So you expect unemployment to start abating and people will start finding jobs again? Or do you just expect things to level off?
July 28th, 2009 at 12:07 pm
So if HFT trading is made to slow down, does that mean stocks bought at the peak will go the way of auction rate securities … no buyers at any realistic price???
July 28th, 2009 at 12:21 pm
Mannwich; Based on my current best guess I think unemployment will hit 11% this year and top at 12% sometimes next year. I expect the incentives to bring the car and house shopper back out into those of us who have been doing the right and prudent thing with our money in the last 5 years. For a lot of people the main reason to not get a house has been the fear that it would fall drastically in value – a fair number (but not all) of those will be “converted” by the sales pitches of yesteryear. I don’t think they will manage to re-blow the bobble, but housing will stabilize to a +/- 10% change. All this is dependent on my believe that we are done with the “nobody-could-have-predicted” nasty surprises. If something comes along that I have not predicted (and I am no nobody), then all bets are off :-)
July 28th, 2009 at 12:25 pm
Slowing down HFT seems like a good idea in terms of removing this drain on the financial system, but I personally hold no hopes of that. Would sort of be like declaring FNM and FRE bankrupt. Just ain’t gonna happen…too embedded in the “system.”
Anything that negatively impacts liquidity will not likely receive an attentive ear inside the beltway.
My ten centavos.
July 28th, 2009 at 12:47 pm
dead hobo,
Still to early to tell. Buyers have been accumulating on the dips, today so far has seen some exception but there is lots of time left in the day. I would like to see the market end near the low for the day before calling a short term top. I did gamble this morning and take my hedges off on the bounce, with the rationale that this will be a slow week given bond auctions and lack luster earnings now that we have had all the banks report and upside surprises out of the way. I’m hoping for a pull back to around 960, anticipating what end of day and tomorrow will bring.
July 28th, 2009 at 12:51 pm
Here are “some economists” explaining why renegotiating and not foreclosing is a good idea.
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/27/AR2009072703065.html?wpisrc=newsletter
Seems to me they still miss the point. What sense does it make to kick the can down the road, when the home owner is underwater equity wise. Based on the CA data someone posted here, they are refusing to negotiate the principle down, just the interest rate, at least for the short term.
Apparently they don’t want to take the write-off now, while they can use “mark-to-market” to their benefit.
SO just another example of how gov policy tangles things up instead of clearing the decks.
July 28th, 2009 at 1:04 pm
This may not sound like housing news, but it is, from the WSJ:
” Bank of America Chief Executive Kenneth Lewis told investors last week he is planning to shrink the company’s 6,100-branch network by about 10%, a pullback from the two-decade expansion that took the bank from coast to coast.”
http://online.wsj.com/article/SB124874668619485699.html#mod=testMod
First, if you can’t make money when money is free to you and expensive to others, well, you’ve got real problems. What, you say, he didn’t mention the inability to make money? It’s buried further down:
“Mr. Lewis said July 17 that it would be “much tougher” to make money in the second half of 2009.”
My prediction: Bank of America, realizing that the ship is still going down no matter how much water it bails, will jettison both Merrill Lynch and Countrywide over the side before the end of next year. Its mortgage operations only cost it $750 million last quarter. And it’s gonna get harder to make money? I imagine so, especially when the Fed finally reaches the end of its $1.25m pixel-pushing endeavor to support housing, which is why none of the housing “prices” quoted above have much real meaning.
July 28th, 2009 at 1:14 pm
OT:
“A Chase employee was being questioned by investigators Tuesday afternoon after saying that a suspicious package that evacuated the massive complex was probably hers.
According to investigators, the device was roughly the size of a loaf of bread and contained three lights and a stopwatch. It was plugged in to an electrical outlet inside the building”
http://www.10tv.com/live/content/local/stories/2009/07/28/story_bank.html?sid=102
July 28th, 2009 at 1:40 pm
I think U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.
“Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year,” RealtyTrac
The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.
Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months.
“One in every 84 households with loans got at least one foreclosure filing in the first half of this year.”
Read More: http://www.housingnewslive.com
July 28th, 2009 at 1:43 pm
@TC,
Nice post @ 1:04.
July 28th, 2009 at 2:30 pm
Matt, here’s waht they found!
http://blog.makezine.com/358766067_da00b3656e.jpg
July 28th, 2009 at 2:37 pm
the banks are holding their shadow invty of foreclosures waiting for a mega bailout from Turbo Timmy but he doesn’t have enough bailout bucks left and he’s afraid of congress
July 28th, 2009 at 2:47 pm
ben
I thought you would find this interesting:
“And, remember: The news isn’t just about the cold hard data. It’s also about the way the data is interpreted. In this regard, keep an eye on Obama’s poll numbers. They should serve as a good proxy for social mood; they’ll give us clues as to whether economic data will tend to be perceived positively or negatively.”
Have We Reached a Top?</
He’s pretty much nailed things lately and decided to scale out of his long a bit lower.
July 28th, 2009 at 2:50 pm
Oops. Messed that hyper link up and pushed submit accidentally.
July 28th, 2009 at 3:00 pm
onlooker,
thanks for the lin, that was an interesting read. appreciate it.
July 28th, 2009 at 3:08 pm
@jc:
I just thought it was an amusing story because the device was described as having a stop-watch, blinking lights, and plugged into a wall – 3 things that tell me it was NOT cause for alarm (outside of Hollywood movies).
July 28th, 2009 at 3:40 pm
I have read this blog for several months by now, but this is my first time I write anything. Regarding yesterday`s New Home Sales numbers there is a very interesting point I would like to comment about. From June 2008 to June 2009, every single month the number of sales has been lower than the new permits, new starts and new constructed homes for the same month, but media keep telling us that the inventory is getting lower. I can not understand how can this happend. If I sold fewer houses that what i have just finished how can I reduce the stock. Even worse if in June there were sold 36,000 houses but were started 58,000, I guess if situation does not improve in next months ( but usually fewer houses are sold in winter than in the summer) things can be pretty bad in few months. There is another conclusion you can get from these numbers. In june 2009 there were fewer starts than finished homes. That tells me more unemployed people in the construction sector for July.
July 29th, 2009 at 9:35 am
[...] release failed to mention that the number hadn’t been seasonally adjusted: http://www.ritholtz.com/blog/2009/07/case-shiller-seasonal-adjustments/ [...]