The December New Home Sales Report Is A Farce
by Dave Kranzler, Investment Research Dynamics
Unstable and worthless headline reporting continued with the Census Bureau’s latest estimate of new-home sales, which was for December 2014 in the current circumstance…As an example of the reporting absurdities here, consider that new-home sales in the Northeast rose by a headline 53.9% month-to-month in December, with a 90% confidence interval around that growth rate of plus-or-minus 95.9% – John Williams, Shadowstats.com
Last week’s report on December new home sales from the Census Bureau was nothing short of a complete joke. It represented the epitome of our Government’s fictitious economic reporting.
I wrote an article for Seeking Alpha detailing why the data contained in the Census Bureaus’s report simply is not credible. As an example, the CB is telling us that new home sales in the Northeast popped up 53% higher than in November. Seriously? No, they can’t be serious. Below in the footnotes it notes that at the 90% level of confidence, the real number could have been somewhere between -42.3% to +149.5%. Huh? In other words, there’s not one shred of credibility that we can attach to the report.
There’s much more in-depth examples and analysis in the article, which you can access here: A Highly Questionable New Home Sales Report For December.
Based on this, we can infer that the homebuilder stocks are now insanely overvalued. The only reason many of them have bounced over the last couple months is because the entire stock market, for the most part, has been so frothy. That, plus irrational hope that the Government’s attempt to stuff low interest, low down payment mortgages into folks who can’t afford to own a home will stimulate sales. It won’t. It might stimulate some attempted flipper sales, but most of those will choke on their “investment.” I’m already seeing “for sale” and “for lease” signs sitting outside townhome deveolpments around Denver. The “for sale” signs being re-sale offerings purchased by “investors” before the development was completed.