Housing Numbers: We May Not Be Rock Bottom Yet
So I'm sure many of you are scratching your heads trying to figure out how, amid the now constant din of the housing crisis, we suddenly get this report from the Commerce Dept. that new home sales and prices bumped up in September?? Well before everyone starts hailing the home builders and calling a big bad bottom to the market, a couple of key points:
1. The margin of error on this survey is 10 percent, which is twice the actual number it's reporting.
2. New home sales numbers are constantly revised, and like last month, this number will likely be revised down as well. Existing homes survey is far wider and more accurate.
3. New home sales numbers are based on contracts signed, not closings, and cancellation rates which are running in the 30 to 45 percent range, are not factored in.
4. Prices are up but these don't figure in incentives.
Now I don't want to be a total downer about the report because there is a good number in it: inventories. The number of new homes on the market is coming down, and that's a really good thing. Builders are slowing the pace and getting properties off their balance sheets. That's healthy for the overall housing market.
On another note, I'm in Vegas today moderating a housing panel at the Urban Land Institute Convention. Should be really interesting, and there are lots of key players here. So blog ya later. FYI: here's a link to the Land Institute and you might want to check out their web cast of the event starting at 3:45 pm EST. Registration is required.
Questions? Comments? RealtyCheck@cnbc.com