Census Bureau Footnote Suggests New Home Sales May Be Stronger Than Reported

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It’s been widely reported this week that New Home Sales cratered in February, a signal that the housing market may be softening.

But is it really? The stories conveniently ignore a very important footnote that puts the whole report in doubt.

Sales Volume Down, Supply Up

According to the Census Bureau, sales of newly-built homes plunged 17 percent last month to a seasonally-adjusted, annualized 250,000 units.

It’s the lowest New Home Sales reading in recorded history.

Furthermore, the available supply of new homes for sale rose to 8.9 months — a 1.5 month jump from January.

In isolation, this might not be a big deal, but February’s New Home Sales data is the third in a series of housing reports that muddy the sector’s future a bit.

Earlier this week, the National Association of REALTORS® reported Existing Home Sales down 10 percent from February, and the Federal Home Finance Agency said home values slipped 0.3 percent between December and January.

Census : “Zero Confidence” In The Data Accuracy

There’s been a series of stories about the recent woes in housing:

• No Spring In Housing’s Step (WSJ)
• Is Housing Really In Recovery (CNBC)
• Experts See Weak Recovery (UPI)

With respect to last month’s New Home Sales data, however, there’s a glaring omission.

Although the Census reported New Home Sales falling -17% last month, the same report also cites thew data’s Margin of Error to read ±19%. It’s right there in the footnotes. In bold.

The ±19% Margin of Error means that — after the report is reviewed and updated with a larger sample set — the actual reading for February could be as much as +2%. Both December and January were revised higher after-the-fact. It’s not unfathomable that February would be, too.

Buying A New Home? Use The Media To Your Advantage.

For now, New Home Sales data reads weak and it’s a story that’s creeped into the mainstream. If you’re buying a new home this month or next, use it to your advantage. Builders and other sellers have likely heard that “housing is falling”, even if it’s not completely true. When you’re making an offer, you may be able to use that to your advantage.

You’ll want every dollar off that home price possible, too, because mortgage rates have resumed rising after a 5-week rally. Every 1/8 percent increase adds to your long-term costs of homeownership.

To get a real-time rate quote, . Include some bullet points about your home and your loan and we can take it from there. Turnaround is fast and my rates are low. Reach out anytime.

(Post adapted from Bring the Blog, a blogging service for loan officers and REALTORS®)