It was on all the news programs yesterday - new home sales up, perhaps signalling and end to the economic downturn. Dow Jones index and financial institution stocks up sharply. Analysts "cautiously optimistic."
Nouriel Roubini's website, the RGE Monitor, explains the truth about the data today. New home sales were NOT up. Here's the data from the Census Bureau:
Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (±18.3%)* above the revised January rate of 322,000, but is 41.1 percent (±7.9%) below the February 2008 estimate of 572,000.Note the +/- sign in the data. The numbers represent an ESTIMATE, and because the data has been experiencing wide fluctuations in recent reporting periods, the predictability of the number is less reliable. The sales are estimated at 4.7 percent plus or minus 18.3 percent different from January's numbers. So they could be about 13% lower - or 23% higher - or no change at all. The numbers are not actually "meaningless," but it is not possible to tell from the numbers whether they have changed at all from last month.
They HAVE, however, reliably changed from last YEAR. They are DOWN sharply. The standard deviation of 8% is much less than the estimated change of -40%, so it can be reliably said that sales are down about 30-50%.
I have a degree of trust in Nouriel Roubini, because it was hearing his dire predictions on Bloomberg on satellite radio that encouraged me to get virtually out of the equity markets two years ago. I cited his bearish viewpoint twice in this blog in January of 2008, when the Dow was near 13,000. In any case, the key point in this instance is not his opinion, but rather how to view the Census Bureau numbers. The mainstream media has MISinterpreted them, probably out of a desire to present some cheerful news to the public. Perhaps such maneuvers are necessary to prevent social unrest and/or panic, but in the long run they might be doing a disservice by misleading people in this fashion.