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In the last 24 hours, every business television program and newspaper has carried some variation of the "Home sales sink to 17-year low" headline.
It's a negative-sounding headline and it ignores basic math and statistical analysis.
First, the New Home Sales report included a margin of error that was so large the Census Bureau had to add verbiage to its footnotes that read, paraphrased: "We don't know if New Home Sales increased or decreased last month. This is our best guess."
Second, look at the graph above. Of course New Home Sales fell last month -- just look at how sharply Housing Starts have fallen, too. If fewer homes are being built, it makes sense that fewer homes are being sold.
So, instead of citing 17-year lows, the better statistic for the press to report would have been the 11.0 month supply of new homes on the market. Because it's up from 9.8 in February, buyers may now have additional negotiating leverage with developers that want (or need) to get their unsold, newly-built homes off the books pronto.
Just because the headlines read like bad news doesn't mean that the story is bad news, too. Dig a little deeper for the real story, or if you don't feel like doing your own analysis, let me do it for you every business day and deliver it to you by email.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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