Yesterday morning, Commerce released the New Residential Sales data.
Encouragingly, the media has caught on to the monthly nonsense built into the way numbers get reported, as evidenced by this WSJ headline: New-Home Sales Post Modest Gain Because Prior Months Revised Down
As we noted same time last month on "No, New Homes Sales DID NOT Rise . . .", the game is to report the present UNREVISED latest data versus the revised lower last month’s data.
Example: September 2007 sales of new one-family houses were initially reported at 770,000, up 4.8% from the prior months downward revision of 735,000.
As we warned, that phantom 4.8% gain was likely to disappear when the revisions get reported: Surprise! September got revised down to 716,000 — that swung the monthly numbers to a loss of 2.6%. Not very astonishing — all you need to do is read the data and do the math.
For the latest month of data, we see the same pattern emerge:
– The year-over-year change from October 2006 is minus 23.5%; (The statistically significant margin of error was ±10.3%).
– The median sales price of new houses sold in
October 2007 dropped 13% to
$217,800 — a significant drop from October 2006 price of $250,400;
(average sales price dropped exactly $1,000 o $305,800). Monthg to
month, prices fell 8.6%.
– Initial number of for new one-family houses sold October 2007 was 728,000 — this will likely be revised downwards, also winging it to a loss.
– The fractional initial unrevised gain of 1.7% has a margin of error of ±11.0%, and therefore is not statistically significant.
– Inventory improved, falling 6.7%, representing an 8.5 month supply at the current sales rate.
NOTE: New Home Sales are a measure of contract signings, and do not reflect cancellation rates, which remain significantly elevated in the 20-40% range.
While Homebuilders have been doing what they can to cut inventory levels, the problem they face is competition from existing
homes for sale — which make up more than 80% of total Homes for sale inventory.
Chart courtesy of Barron’s and Econoday
NEW RESIDENTIAL SALES IN OCTOBER 2007
Commerce Dept, Novermber 29, 2007
New-Home Sales Post Modest Gain Because Prior Months Revised Down
WSJ, November 29, 2007 10:27 a.m.