This morning’s catastrophic drop in the National Association of Hope Home Builders sentiment index has rapidly been spun as due to the weather… of course, makes perfect sense, right? What would happen if these drops were actually real fundamentals? If the status quo, the “common knowledge” was shown to be full of shit (once again). Well, riddle us this Batman… if weather was to blame, then why did the “West” region plunge the most? In fact, why did The West plunge the most on record? Too much sunny dry weather not good for sales? In fact, even the entirely indpendent provider of real estate research Trulia said that weather is not to blame…
The West dropped the most on record – we assume that warm, dry weather is detrimental to home-buying in some way?
And kindly explain how the weather was the driver when The West dropped the most of all the regions… (West -14, NorthEast -8, MidWest -9, South -7)
And here’s what Trulia told everyone…
Winter Weather is a Wobble, not a Hobble
Here’s what the weather wobble means for interpreting the forthcoming January construction and sales data. Because the weather had a slight negative impact on housing activity, flat month-over-month numbers for construction or sales would mean that other market forces were strong enough to offset the negative effect of bad weather. But if housing activity fell month-over-month in January by more than the predicted weather effect, don’t pin the entire drop on the cold.
That means if existing home sales fall by 5% month-over-month in January, for example, then only a bit of decline (1.1%) should be blamed on weather. The regional patterns in housing activity will also help reveal whether weather mattered. The impact of January’s weather on starts should be most negative in the Northeast and Midwest, so if starts decline most in the South and West, then weather’s not the culprit. Finally, housing activity tends to bounce partway back the month after bad weather (unless that next month is unusually bad, too). Rain and cold don’t last forever, and neither do their effects on housing.
Therefore, bad winter weather will only delay some construction and sales activity, rather than make it disappear. Severe winter weather may cause housing activity to wobble, but cold, rain, and snow won’t hobble the housing recovery.
But sure, as opposed to face up to reality, keep blaming the weather…