New home sales were up 11% or down 21.3% Excuse me? Is that really good news or really bad news?
Yahoo News had this to say:
New home sales in June posted the fastest increase in more than eight years as buyers took advantage of bargain prices, low interest rates and a federal tax credit for first-time homeowners
What was omitted by Yahoo: The home sales increase was on a month to month basis, and NOT on a year over year basis as it should be presented. Month to month (May 2009 versus June 2009) sales were up 11%. Year over year (June 2008 versus June 2009) sales were down 21.3% Like many other economic events, home sales show a strong seasonal tendency and to only tout monthly changes without showing year over year data does not provide a complete picture to the reader.
Calculated Risk provides an excellent blog entry and graph showing the sales during each month as well as year to year.
Fundmymutualfund has a slightly snarkier commentary:
I'm feeling faint.... the news is so overwhelmingly good. Even though sales surge EVERY year in the spring let me shoot this bunny out of a cannon in celebration because....
Sales have risen for three straight months. Now keep in mind this is with taxpayer handouts of $8000 to first time homebuyers, along with unnatural mortgage rates created at the expense of savers in this country via Uncle Ben's actions. More on this later. So the important question in a SEASONAL number is the year over year % change. Sales of new homes were down 21% versus June 2008.
At least the Wall Street Journal had the sense to put in the year over year numbers, but in the body of the article and not in the title?
What is going to happen to all the good news reporting in the fall when it is very likely new home sales will fall on a month to month as well as yearly basis?
Disclosure: Short some housing stocks in personal and aggressive client accounts