New home sales are at a 17-year low? Dan Green posts an excellent example of how the news media distorts and misrepresents the news.
Technorati Tags: blogging, real estate, real estate marketing
There’s always something to howl about.
New home sales are at a 17-year low? Dan Green posts an excellent example of how the news media distorts and misrepresents the news.
Technorati Tags: blogging, real estate, real estate marketing
Sean Purcell says:
Greg,
I have always found new home sales to be indicative at best. It is not so much a reflection of what is happening in the home market (and more importantly our client’s home market) as it is an indication of how the so called experts are investing their money vis-a-vis the housing market. If things don’t look good for profits, you stop building homes and so new home sales fall. What exactly does that mean to the couple trying to sell their existing home?
A corporation may decide that current economics are not conducive to a stock offering, but that does not mean buying their stock is a bad investment.
Having said that; Dan Green does not do justice to the lunacy that is government data reporting when he paraphrases:
The actual report says that the February numbers are a reduction in comparison to the January number of 1.8% (plus or minus 15.0%)!!(emphasis mine) They footnote this beauty with the disclaimer that they do
How in the world do we ever take any numbers that come from the government seriously?
April 25, 2008 — 11:59 am
Robert Kerr says:
With all due respect, if anyone’s being misled it’s Dan Green’s audience.
Dan’s theme is sales are down because starts are down. Well, that’s clearly wrong. Wet sidewalks don’t cause rain.
Honestly, I’m quite surprised anyone has the nerve to argue that declining starts are the causal factor of declining sales in this market.
Good point about the margin of error, but the rest is specious bunkum.
April 25, 2008 — 8:12 pm
Doug Quance says:
I’m going to have to agree with Robert – the conditions exist whereby we could see a large increase in new home sales WITHOUT an increase in the number of new homes being built (thus reducing the inventory) because of one does not the other make.
If there was a cause an effect like that… then all we’d need to do is build more houses and all our problems would go away!
NOT!
April 26, 2008 — 9:31 am
Dan Green says:
Funny thing about statistics — there’s a million ways to interpret them!
I agree with Robert and Doug — the cause-effect relationship between Housing Starts and New Homes Sales is specious, at best. I am pretty sure that one leads the other, though. I just don’t know which one.
More importantly, it was the headline that moved me to address the topic at all. It’s like somebody in Cincinnati that said to me last week, “The last time it was 70 degrees was five months ago.”
Well, duh. We just got through Winter and it’s rarely 70 degrees when you’re watching for the groundhog.
I have a similar issue with the national median home sale price — it doesn’t tell us anything useful on a national level and it’s completely irrelevant to the local market.
April 26, 2008 — 10:31 am
Robert Kerr says:
I agree with Robert and Doug — the cause-effect relationship between Housing Starts and New Homes Sales is specious, at best. I am pretty sure that one leads the other, though. I just don’t know which one.
Either can lead, it depends on market specifics. Or they can be completely decoupled. And they may look correlated even if they’re orthogonal.
To your blog post: if declining new home starts is a causal factor in a decreasing sales, then you must also have low inventory.
But inventory is at or near record levels, so declining starts are not causing declining sales, at least not in this market.
I have a similar issue with the national median home sale price — it doesn’t tell us anything useful on a national level and it’s completely irrelevant to the local market.
Median sale price is a terrible metric, but better than most others. What would you use, instead?
April 26, 2008 — 7:55 pm
Gerry (RealtyMan) Bourgeois says:
In MY market (Central Massachusetts), I am seeing that builders WANT to build! But, unless they have sold the last of their ‘already built’ inventory (some of which has been on the market for 2 years +/- )or they have a willing, ready and Able buyer (i.e. An agreement on their present house – or no sale contingency)they are reluctant to start anything!
That being said, the statistics in my market show that many areas saw an Increase in the number of “single family” sales (2007 vs. 2006)!
If I take the Whole market (single family, condos, multis, etc.) then Yes – overall units are down. However Single Family homes Did see a notable increase in the number of Sold units year over year.
We need to find these positive points of data and let everyone (at least your local market) know what they are. It is not ALL Doom & Gloom!
April 27, 2008 — 5:44 pm