Not So Fast On New Home Sales

On Tuesday, we noted that New Home Sales fell 42%. There was one small piece of the data I failed to mention earlier in the week, which is worth discussing -- the March revisions:

1) Revisions: April's (unrevised) data for new homes was 526k annualized units (+3.3). That is the identical to the number released in March -- 526k units. March sales were revised to -11%
from -8.5%. So but for the revisions, March to April headlinenumber was flat.

How did we show a 3.3% monthly gain? Tuesday’s report saw March revised DOWNWARDS from 526k units to 509k units. In other words, April did not so much showed a positive move upwards (statistical error notwithstanding) as much as the prior month comparison was revised downwards.

2) Apples to Oranges: Why do we compare Revised versus Unrevised data? The overall trend for the past year has been mostly downward revisions. An apples-to-apples comparison would be an original release to original release (that showed flat data, not an increase in new home sales).

Comparing the original (but soon to be revised) April data to the revised March data presents a misleading picture.

3) Cancellations: Of course, none of the new home sales data includes cancellations, which were running north of 30% -- and with the recently tightened credit, it may be even worse.

Previously:
No, New Homes Sales DID NOT Rise . . . (October 2007)
http://bigpicture.typepad.com/comments/2007/10/no-new-homes-sa.html

Source:
New Residential Sales
The Census Bureau MAY 27, 2008
http://www.census.gov/newhomesales

Download New Res Sales_5.27.08.pdf

Related:
Cockeyed Optimists See Housing Recovery
RANDALL W. FORSYTH
Barron's May 28, 2008
http://online.barrons.com/article/SB121194838416825475.html