Every month, the National Association of Realtors gives the count of existing homes sold (closed), and the U.S. Census Bureau designates the number of new home sales (contracts written -- fallout inevitable). This week’s figures were for January. Existing sales up 0.4 percent to an annual rate of 5.47 million. Cool. Good news. But sales of new homes fell 9.2 percent to an annual rate of 494,000. Ouch. Bad news. Or ... possibly not news at all. GIGO? First coined in the 1960s, “GIGO” in then-new computer technology was the acronym for "garbage in, garbage out." A bad program concept was one way, shuffled punch-cards another. Here are the problems with the two housing reports above. First, each report is the change from the prior month, not a longer-term average. Then...
- Using annualized sales data is a great deal like describing a Super Bowl based on events in five minutes in the first quarter.
- Look for confirming data from different sources and see if they crossfoot. Is a year-over-year 11.0 percent gain in existing sales a true picture of growing strength?
- The change in loan applications in the last half-dozen years does support data showing a stronger overall market, but it’s closely correlated with rates.