What Does "Seasonally Adjusted" Mean?

Recently a number of real estate related reports have been released and you may have noticed that many of them included wording to the effect of "seasonally adjusted annual rate ..."  One of the most recent reports was that of last month's sales of new single family homes were up 27%.    So what does "seasonally adjusted" mean?

Markets for just about anything have regular cycles.  There are expected annual ups and downs just like a rollercoaster.  The same is true for the real estate market.

The Triangle area of North Carolina's real estate market follows a similar trend that is seen throughout much of the country.  As you can see in the graph of homes sold in the Raleigh-Durham (Cary, Chapel Hill, etc) metro area, every year has had a fairly regular rise and fall of sales:


Every year sales begin to increase and eventually climax during the summer months around June/July.

So how does this relate to "seasonally adjusted"?

When calculating and providing data, economists will usually adjust reports based on the season if the market has predictable "ups and downs."  So when you see a report on anything from housing to employment, there is probably a seasonal component.  A report coming out in July stating "homes sales rise" without any consideration of the seasonality of the market would be misleading.  Of course home sales rose in July!  They almost always do in the summer.  That's why the number gets "seasonally adjusted."

How the Triangle real estate market is doing this year compared to 2009: 

Almost 200 more homes sold in the Triangle in March 2010 than in March of 2009.  However, keep in mind the driving force could be the Home Buyer Tax Credit.  

It will be interesting to see how the rest of this year pans out.  Is the tax credit "robbing" sales from the future summer sales?  Or will we see continued growth even after the tax credit ends tomorrow?