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Sometimes I long for the days when newspapers and magazines were the main sources of economic information for investors. They took the time to analyze data before their headlines and reports influenced investor thinking.

With television and the Internet, the goal is not accuracy but speed.

With investors glued to their TV sets when each economic report is due, those reporting it must comment instantly, giving a kneejerk reaction without time to analyze the data. And with investors constantly surfing the Internet looking for the latest news for guidance, the first websites to carry the headline corresponding to the latest economic report is going to get the millions of ‘hits’ that produce higher advertising revenue.

We’ve had two classic examples this week. On Tuesday, the Fed released its statement after its FOMC meeting, saying it “will continue to monitor the economic outlook and financial developments, and is prepared to provide additional accommodation if needed to support the economic recovery.”

The instant kneejerk reaction in the TV media was that the statement was a big positive, indicating the Fed is about to provide more economic stimulus. The headlines on the Internet with that same opinion were appearing within minutes. The stock market shot up 120 points in 30 minutes.

But whoops. After taking time to think about it, the reactions changed to hey, the Fed said it will take action only if the economy gets worse, that’s not a positive. The stock market dropped as fast as it had spiked up.

This morning, it was reported that existing home sales rose 7.6% in August from July’s level. Wow. The instant reaction was that housing has bottomed.

But come on, folks. Let’s look at the facts. Even a 7.6% improvement from July’s horribly depressed level makes August the 2nd worst month on record.

First let’s compare it to a year ago. In August of last year, existing homes sold at an annualized rate of 5.1 million homes. Today’s report was that this August they sold at an annualized rate of 4.1 million homes, down 19.6% year over year. This is a continuing recovery from last year’s recession? I don’t think so.

Let’s focus in a little closer and compare the 3rd quarter so far to the 2nd quarter.

In April, existing home sales were at a 5.77 million annualized rate, in May 5.66 million, and in June at 4.6 million. That’s a monthly average of 5.34 million for the 2nd quarter.

So far in the 3rd quarter, the bottom has dropped out of housing again. Existing home sales plunged in July in the largest monthly decline ever, to an annualized pace of only 3.37 million homes. And now it’s reported that August sales were up 7.6% from July record low, but to a pace of only 4.13 million homes (the second lowest monthly pace on record).

So the monthly average in the 3rd quarter so far is an annualized rate of 3.75 million homes, down from the monthly average in the 2nd quarter of 5.34 million. That’s a 29.7% quarter to quarter decline. This is not a positive report by any means, but another sign that the economy in the 3rd quarter is worse than the dismal 2nd quarter, when GDP grew at only a 1.6% pace. .

New home sales for August will be reported this morning, and given the way the bottom also dropped out for them in July, a similar bounce back is expected. Will it also be taken as a positive by the media and investors? Probably.

But by the home-builders themselves? Probably not, given Monday’s report that the Housing Market Index, which measures the outlook of home-builders, was mired in the ditch at just 13 (on a scale of 1 – 100), for the second straight month.

Disclosure: No positions

Source: August Home Sales Were Actually Terrible