Storms Gather on Housing Front ... Right?

The New York Times reported new homes sales at their slowest pace in more than seven years, with median prices down 7.5 percent from the previous year. Though, interestingly, when you look at the actual Commerce Department Report, the numbers are hardly written in stone:

Sales of new one-family houses in August 2007 were at a seasonally adjusted annual rate of 795,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.3 percent (±12.4%)* below the revised July rate of 867,000 and is 21.2 percent (±9.0%) below the August 2006 estimate of 1,009,000.

Those margins of error at a 90 percent confidence level are pretty big; in comparison with the revised July rate, the potential error is even larger than the estimated difference.

So, the Times is comparing a reasonably uncertain estimate to more accurate past numbers. And then other questions come up, as well. Is the drop in home sales also due to builders expecting a slow-down and scaling back their work levels? Why not look at the median number of months for sales apparently jumping from roughly 4 in 2005 and 2006 to the current 6? This is an example of the problem with reporting on economic data - it takes knowledge and effort to dig in and understand exactly what it is saying.

For those who'd like some perspective on the numbers, Investors Business Daily has a couple of informative graphs that show trends (at the bottom of the page).