Believe it or not the Easter holiday is hitting the April housing data. The Easter Distortion is caused by whether the holiday falls in March or April and the number of working days in the month.
Hedgeye U.S. Macro analyst Christian Drake breaks down this interesting phenomenon in today's Early Look:
"Across the Housing space, the last couple days saw these two beauties on the demand front: New Home Sales (NHS) in April fell -11.4% sequentially and decelerated to just +0.5% YoY, the slowest pace of growth in 15-months.
Did housing demand suddenly atrophy in April?
We think not. More probably, it’s a statistical distortion stemming from the shifting Easter Holiday.
Today’s Chart of the Day below visualizes the Distortion dynamic.
It’s a histogram showing the distribution of sequential percentage changes (M/M % Chg) in NHS from 2001-Present.
As can be seen, the black bars – which represent the full data set - are approximately normally distributed with a small positive central tendency, which is what you would expect to see.
We then plotted the April values for years in which Easter occurred in April. Those are shown in red. While the 'n' isn’t particularly large, the distribution is interesting as it’s clearly skewed left, meaning that those April's seem to be consistently worse than the broader population.
Meanwhile, the distribution for May plots with positive skew as the distortion reversal generally supports sequential strength."