Tuesday, June 23, 2009

National Home Sales In May Rise - And Fall - With Five Different Figures - In Morning LA Times

Below are two of the top three headlines on the LA Times website's Business section:


U.S. home sales fall in May despite low prices and tax incentives

Home resales in U.S. rise 2.4% in May to 4.77 million rate

Now the 3.6% fall in the Peter Hong LAT article is from May of last year to May of this year - while the increase of 2.4% in the Bloomberg wire report is from the prior month of April of this year to May of this year.

Even more confusing is that the Bloomberg prices are going up article has a typo when it mentioned the 3.6% fall:

"Sales were 3.6 percent compared with a year earlier."

Yes, according to Bloomberg - sales this May were only 3.6% of May of last year - a staggering over 95% decline in sales!

Also in Bloomberg's LAT wire piece are details of the yearly 2.4% increase:

"Purchases increased 2.4 percent to an annual rate of 4.77 million, lower than forecast, the National Association of Realtors said today in Washington"

Then in Peter Hong's LAT piece, he leads with the 3.6% year to year decline and he explains how that figure is arrived at:

"May home sales were down 3.6% from the same month last year, the National Assn. of Realtors reported. The industry group based that figure on the seasonally adjusted annual rate of home sales, which is the number of homes that would sell for the entire year based on May's sales rate."

Hong then addresses the April to May increase - but he now uses a different set of figures - the absolute number of sales that month as opposed to the adjusting the stats on an annual basis, which he does explain :

"The total number of homes sold in May was 451,000, or 6.6% below the year-earlier number, but it was up 9.2% from the 413,000 homes sold in April."

So now instead of the 3.6% decline - and the 2.4% increase - we now have 6.6% and 9.2%! And the scary point is - other than the typo - all of these figures are correct!

They are just using different metrics.

Now as for how all this confusion could have been prevented - Peter Hong's piece had more details and a better explanation to a lay person of what was really going on and how the various figures compared with each other. There was really no need to run the Bloomberg piece which just confused the issue. At most, the additional figures also in the Bloomberg article could have been added to the Hong piece - which would have left everyone a lot less confused then the present dueling headlines.

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