« Good and simply better | Main | What is seasonal adjustment and why is it used? »

Comments

Matthew F.

I think the key is that it is the seasonally adjusted ANNUAL rate.

Matthew F.

To go into a little more detail: The "StartsSA" tab says its data is the "Seasonally Adjusted Annual Rate". This means they apply the adjustment factor of 108% to get 129.6k housing starts for the month to adjust for October typically having more housing starts than usual. They then multiply that by 12 to get the annual rate, based on the assumption that the rate reflects a trend that can be used to predict future sales. That's where you get the 1.5 million starts.

You see the same thing with car sales data: Every month when sales figures are released, they calculate the seasonally adjusted annual rate based on the month's performance relative to its usual percentage of the year's sales. Hence the extrapolation of an SAAR of 12.25 million auto sales - few outlets even bother to report the actual number of sales, because it's useless for comparison to previous months.

Kaiser

Matthew: Thanks for the clarification. I wish they made clear they are doing two things, not one. The real seasonal adjustment is at the monthly level; then, there is a projection based on a simple linear model from monthly to annual. The second step is aesthetics, not statistics: it just inflates each number by a factor of 12. Not saying it's not useful, just that it merely changes the scale.
The good news is that my previous work is not all wasted so look for a real post soon.

iAdjustment

I hope the next post will clarify several issues I could not really analyze in this one.
Such as the number of sales per month, and several outcomes from this topic.

Kaiser, Good job on this one, now going to the next post.

Charles Wilson

The writer should have shown the census instead of downloading it from other page so that the readers do not have hard time looking for it.

denisha

the errors posted by the census bureau proved to be non factual.they should have not missed any pertinent data so as to prevent this kind of mishap. think again.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Marketing analytics and data visualization expert. Author and Speaker. Currently at Vimeo and NYU. See my full bio.

Book Blog



Link to junkcharts

Graphics design by Amanda Lee

The Read



Good Books

Keep in Touch

follow me on Twitter

Residues