The Phaserl


The NAR’s Existing Home Sales Report For January Is Not Credible

by Dave Kranzler, Investment Research Dynamics:

The 14 percent quarterly decrease was fueled primarily by a 24 percent quarter-over-quarter decline in purchase originations — the biggest quarterly drop in purchase originations in more than five years, since the third quarter of 2010. – RealtyTrac

EVERYTHING EVERYWHERE that is used to further intended policy is adjusted that way to the nth power. Inflation, employment, housing…Our world has become so delusional and a house of mirrors that it’s impossible to rule out anything. Policy today should be called: NHB (no holds barred).
– A friend and colleague of IRD

The National Association of Realtors reported their statistical estimates for January existing home sales today. According to the NAR, home sales on a Seasonally Adjusted Annualized Rate (SAAR) basis increased .4% in January vs. December. The NAR claims that the same metric shows an 11% year over year increase for January 2016 vs. 2015.

I’ve never understood the purpose of using an annualized rate number in order to report monthly economic data. That does not make any sense whatsoever. To begin with the NAR uses data samples that it describes as “representative.” However, as anyone who has taken elementary statistics in school knows, all data sampling is highly vulnerable to sampling errors and sampling bias. To the extent that the data pool for a monthly time period contains errors, annualizing this data compounds the error by a factor 12.

And then there’s the seasonal adjustments. The NAR will not share its seasonal adjustment algorithms with the public. The seasonal adjustments further pollute the data samples and therefore further corrupt the annualized metric.

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