Here’s Why the Facts Underpinning Bullish New Home Sales Headlines Aren’t So Bullish

wallstreetexaminer.com / by Lee Adler • September 25, 2015

Yesterday’s new home sales report from the Census Bureau triggered an ebullient response. Big media used words like “surge; soar; rise sharply; above expectations” to describe it. The Wall Street Journal said, “Sales of new, single-family homes rose by 5.7% to a seasonally adjusted annual rate of 552,000.” The headline number they reported reflected the monthly seasonal adjustment and sampling error multiplied times 12. The number crushed analysts’ expectations.  The pundits were giddy.

So what is the reality behind that headline number? In honor of the great Yogi Berra, I quote one of his most insightful quips. “You can observe a lot by watching.”  I ahve been carefully watching the actual data in this report for many years. I have had the benefit of “watching” from the perspective of having had my boots on the ground. I sold houses, including new houses, early in my working life. I also worked for many years as a commercial real estate appraiser, where I frequently appraised new housing developments, both pre-development, during the sellout period, and in some cases, after they failed. I have experienced first hand how people actually act when purchasing houses.

So with that perspective, here are a few points that Big Media didn’t mention, that I think are important. First, the Census Bureau prominently points out that their headline, annualized, seasonally finagled number has an error range of +/- 16.2% at a 90% confidence interval. In other words, the headline number could be 641,000 when all the data is in, or it could be 463,000.

READ MORE

The post Here’s Why the Facts Underpinning Bullish New Home Sales Headlines Aren’t So Bullish appeared first on Silver For The People.