The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Housing Sales Data ‘Badly Flawed’?

Posted on | March 25, 2011 | 7 Comments

What if we were in the second dip of a double-dip recession and, because of inaccurate measurements, we didn’t even know it? That’s one possible interpretation of John Schoen’s story at MSNBC:

Two high-profile reports on home sales this week confirmed that the housing market is still mired in a deep slump with prices still falling and sales activity sluggish at best. In fact, the market may be in much worse shape than even those numbers suggest.
Figures from the National Association of Realtors that are among the most closely watched indicators on the housing market have been called into question by economists who say they may overstate existing-home sales activity by up to 20 percent. . . .
According to the Realtors, sales of existing homes fell nearly 10 percent last month, snapping three months of gains. Sales of new homes, which are tracked by the government, plunged in February for a third straight month to the lowest level in records dating back nearly 50 years.
Analysts have theorized that new-home sales have been hurt because prices of existing homes have fallen more quickly, making them relative bargains. But analysts have been unsettled by data suggesting that the housing market is headed into another leg down for sales and prices.

Read the whole thing. Accurately measuring economic activity isn’t easy — just ask the U.S. Commerce Department:

Gross domestic product growth was revised up to an annualized rate of 3.1 percent, the Commerce Department said on Friday in its final estimate, close to its initial estimate of 3.2 percent published two months ago and up from its tally of 2.8 percent made in February.

The fourth quarter ended in December and, in January, Commerce made an initial estimate of 3.2 percent growth. But when it came time to publish the actual data in February, they could show only 2.8 percent growth. Now, however, they’ve had time to accumulate better data and so the numbers have been revised upward to 3.1 percent.

“Close enough for government work.”


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