Record downward revision for home sales slashes second-quarter progress
July 24, 2014, 1:34 PM ET
It turns out that the annualized sales pace of new single-family homes in May was 442,000 – down 62,000, or 12%, from the government’s prior estimate of 504,000. That cut means that May didn’t post the fastest home-sales rate in six years. Now it looks like May saw the most new homes sold since January.
“The optimism about improvement in the housing market was a bit premature,” Yelena Shulyatyeva of BNP Paribas wrote in a research note.
June’s sales rate was 406,000, just a hair above the pace at the end of the first quarter, according to U.S. Commerce Department data.
“We made no progress,” said Mike Wolf, an economist at Wells Fargo Securities.
But it’s important to note that the monthly series is volatile and, clearly, prone to at-times large revisions. June’s data, for example, will surely be revised. The government estimated Thursday that new-homes sales fell 8.1% last month, with a confidence interval of plus or minus 12.3%, signaling that analysts in their first stab at the data weren’t sure whether the pace of new-home sales actually rose or fell.
“In light of these large revisions, it’s hard to know what to make of today’s report, though we can be sure today’s estimate for June sales will change several times over coming months,” said Richard Moody, chief economist at Regions Financial.
Confusion about how to read the data is one factor behind dissenting opinions among economists over how the housing market will fare this year. There are conflicting macro factors, as well. The labor market is strengthening – a great support for housing. But mortgage rates and prices have climbed over the past year, and it’s still tough for many families to get a mortgage.
–Ruth Mantell
"“We made no progress,” said Mike Wolf, an economist at Wells Fargo Securities.
ReplyDeleteBut it’s important to note that the monthly series is volatile and, clearly, prone to at-times large revisions. June’s data, for example, will surely be revised. The government estimated Thursday that new-homes sales fell 8.1% last month, with a confidence interval of plus or minus 12.3%, signaling that analysts in their first stab at the data weren’t sure whether the pace of new-home sales actually rose or fell.
“In light of these large revisions, it’s hard to know what to make of today’s report, though we can be sure today’s estimate for June sales will change several times over coming months,” said Richard Moody, chief economist at Regions Financial.
Confusion about how to read the data is one factor behind dissenting opinions among economists over how the housing market will fare this year."
Why don't they simply wait and publish numbers that mean something instead of these smoke and mirror estimates? This is what leads to lack of faith in government in general.
William, the timing of these statistics is mandated by law. It is up to congress to change the law if it would give a truer picture of the real trends. Good luck with that.
ReplyDeleteThe NAR is a trade association which always tries to paint a rosy picture on the state of the housing market. Here is their take.
ReplyDeleteWASHINGTON (July 28, 2014) – After three consecutive months of solid gains, pending home sales slowed modestly in June, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, declined 1.1 percent to 102.7 in June from 103.8 in May, and is 7.3 percent below June 2013 (110.8). Despite June’s decrease, the index is above 100 – considered an average level of contract activity – for the second consecutive month after failing to reach the mark since November 2013 (100.7).