September New Homes Dropped More Than Was Reported

Investment Research Dynamics

After tearing apart the Census Bureau’s new home sales report for September yesterday, there is no doubt in my mind that the actual number of new home sales for the month of September was significantly lower than was reported in the Census Bureau’s seasonally adjusted annualized rate metric that is reported in the headlines.

If you look at the unadjusted monthly number reported that is in the report but not reported, new home sales plunged 16% from August to September.  Seasonality?  No.  I looked at the data for the previous three years for August and September, which is available on the CB’s website, and there is no seasonal affect that shows up in the data.  In fact, new home sales increased by small amount from August to September last year.

I have written a detail analysis of my findings in this Seeking Alpha article:  September New Home Sales Fell More Than Reported.   

Unless the Fed and the Government re-up another round of what will have to be massive monetary stimulus and taxpayer subsidy of home purchases by a people who can’t afford to support the monthly cost of home ownership, the housing market is headed back into the vicious bear market that began when the housing bubble popped but was kicked down the road by the Fed and the Government.

My latest homebuilder report highlights a homebuilder that will have its stock price more than cut in half as this scenario unfolds.  In addition to a litany of red flags throughout its financials, it is being investigated by the IRS:   Red-Flag Alert Homebuilder  The stock is already down over 5% from when I published the report last week.