July 26, 2007

Correction of Old Media Reporting: New-Home Prices Hold Steady (at Least)

Yesterday, Brent Baker at NewsBusters caught the Old Media emphasis on the decline in existing-home unit sales, even though the median existing-home price went up. CBS and Katie Couric apparently invoked the Great Depression in their existing-home sales commentary (I think any number of those 90 and older could say: “I knew the Depression, and Katie, this is no Depression.”).

Today we have the Commerce report (PDF) that new-home sales volume is down, AND the media crowing (unfortunately fed by the lack of Commerce Dept. detail) that the nationwide median new-home selling price is down:

The median price of a new home sold last month dropped to $237,900, down by 2.2 percent from a year ago. It was the biggest year-over-year price drop since a 6.5 percent fall in April. The median price is the point where half the homes sold for more and half for less.

But at the risk of sounding like a broken record, I’m forced to make the same point I made a couple of months ago in more detail — by the time you consider changes in the regional mix in home sales, you’re left with an overall new-home market where regional prices are holding steady or perhaps even slightly increasing — and definitely NOT in decline.

For now, I’ll just post the following figures, and if I think I need it, I’ll do a more detailed post tonight:

NewHomeSalesFigures0607vPriors

Note: The table was revised at 11:30 p.m. to reflect new home sales. Existing-sales data was used earlier as it was the only data I could find at the time, and the proportional relationship of regional selling prices is similar to that found with new homes.

The drop-dead obvious point to anyone looking at these figures for more than 30 seconds is that the regional mix of new-homes sales is weighted more heavily in the less-expensive South and Midwest regions. Of course the national median selling price will go down if prices are steady (or even slightly increasing) and you mix 5% or 6% more homes from cheaper regions, supplanting 5% or 6% from the more expensive ones. Duh.

People who are doing business reporting for a living are making the same lazy mistake month after month in reporting housing-market conditions. It’s getting very tiresome. Reasonable people have to wonder if there’s no further looking into the details simply because the topside result fits the “GOP is in the White House, the economy must be bad” template.

This misreporting has gotten so annoying that I am going to do the detailed work later tonight. It would not surprise me if the median new-home selling price in a couple of regions has actually risen.

11: 30 p.m. — Feeling under the weather. A revised version of this post is going up at NewsBusters. That will have to do for now.

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UPDATE: Quarterly data by region obtained from the Census Bureau prove the point:

RegionalNHsalesMediansByQuarter

Year-over-year new-home median sales prices are higher in three out of four regions (WAY higher in the West and Northeast), as are Q107′s medians compared to Q406′s. Yet the nationwide median is only up a few percentage points, primarly because of the lower-cost South’s increasing percentage of total sales volume.

Case closed.

UPDATE 2, July 28: This state-by-state picture also tells the tale — Four of the five lowest-median states are in the South, whose percentage of nationwide sales has grown.

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