Scott Patterson in today’s WSJ writes:
“The housing news has been so grim for so long that
investors seize on any data that is less than disastrous as a sign of a
recovery right around the corner.
That is a risky bet based more on wishful thinking
than common sense. With the economy teetering on recession, credit
tight and the labor market weakening, odds are that housing will keep
getting worse before it starts to get better.
Tuesday’s National Association of Realtors’ report on
existing-home sales in March will test investor thirst for good news.
Economists surveyed by Dow Jones forecast that March sales will drop 2%
from the previous month. If the report is better than that, expect to
hear talk about more lights flashing at the end of the tunnel.”
The WSJ article looks at 3 factors that are continuing to impact Home
Sales: Falling prices,a weakening labor market, and very tight credit
Despite those three very real concerns, I am going to make a bold forecast: Existing Home Sales (untis, not price) may very likely to increase when reported today at 10am.
An even bolder forecast: Existing Home Sales may very likely to show increases in total homes sold each and every month from now through August.
Why? As we have discussed before, its the Seasonality factor.
Have a look at this chart:
Composite Monthly Sales non-seasonally adjusted
That explains the month to month permutations, and why you need to look at year-over-year data.
(more on this later today)
Existing Home Sales, Non Seasonally Adjusted, Explained
Home Data May Inspire False Hope
WSJ, April 22, 2008; Page C1