Wednesday, April 26, 2006

Media Headlines Misleading on New Home Sales Data

Here are some of the headlines put out by the media on today's US Census Bureau New Home Sales Numbers [pdf]:

Very Positive Headlines on New Home Sales Data:
Mixed Headlines on New Home Sales Data :
Negative Headlines on New Home Sales Data:
Did the headlines in the media properly reflect the significant information from the new home sale report?

The headlines by the media failed to capture the main points of the new home sales report. Here is why:
  • Sure, seasonally adjusted new home sales increased by 13.8 from February 06. However, this was still down 7% from March 2005.
  • "The median new home price slipped 2.2 percent from a year earlier to $224,200, the first year-over-year decline since December 2003, the Commerce Department said"
  • "The 555,000 units of inventory is another all time record for new houses for sale. On a months of supply basis, inventory is significantly above the level of recent years." [Calculated Risk]. Up 25% from March 2005 when inventory was 441,000.
A much fairer headline could read 'March New Home Sales Data Mixed'. The media should be ashamed of their headlines regarding the new homes sales data. It is misleading.

The real news is that the year over year (YoY) numbers for both the number of sales and median sales price declined. Additionally, inventory of unsold new homes increased 25% YoY from March 2005.

All, this leaves aside the whole question of the value of the initial housing numbers from the Census Bureau as they have large amounts of uncertainty which the Census Bureau readily admits. The revised are much more trustworthy.

Housing Panic also takes the media to task
Posted by David at 11:58 PM 24 comments
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