Why does no one believe the terrible new home sales number for February? Because the Census Bureau aren't sure themselves that the numbers are right.
I noted earlier that many analysts simply did not believe the big drop in February new home sales. They continue to believe that other indicators did not show that big a drop and that revisions upward were likely.?
Is this a pipe dream? Not exactly. I asked analyst John Burns exactly how accurate these estimates are. It has to do with the fact that the sales figures are estimates. Estimates you could drive a truck through.
Here's what the Census Bureau release actually said: February new home sales were "16.9 percent (±19.1%) below the revised January rate."
The "±19.1%" is the key. This is the confidence interval. It means the Census Bureau is 90 percent confident that new home sales were somewhere between DOWN 36 percent (down 16.9 percent plus down 19.1 percent) and UP 2.2 percent (down 16.9 percent plus up 19.1 percent) from January to February.
I'll repeat that: new home sales were somewhere between DOWN 36 percent or UP 2.2 percent. And even then, the Census Bureau is only 90 percent sure it's in that range.
See why many analysts think something is wrong? (For another view, watch thevideo — Real Estate Markets 'Still Spotty': Sternlicht)
Wait, it gets better. Buried in the jargon is this statement from Census: "All ranges given for percent changes are 90-percent confidence intervals and account only for sampling variability. If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease."
Since the range does contain zero (it goes from down 36 percent to up 2.2 percent)....the change is not statistically significant.
In other words, the Census Bureau has told us they really do not know whether new home sales went up or down in February.
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