Economic Reports
In Another Good Sign for the Housing Market, Builders Are Clearing Out Their Inventory
June 26, 2009 by James K Barath, CMPS · Leave a Comment
If you only saw the headlines this week, you may have missed another positive sign in the housing market.
According to the Census Bureau, the supply of newly-built homes for sale fell to 10.2 months in May, its lowest level in 10 months.
Unfortunately, the New Homes Sales story wasn’t positioned as a positively by the press. Instead, the most common headline on the data read “New Home Sales Dip 0.6%” with many journalists referring to the figures as “weak” or “disappointing”.
Only, that’s not completely true.
See, one of the nice elements of the monthly New Home Sales report is its footnote section in which the Census Bureau talks about statistical Margin of Error and that section tells us that if the Margin of Error is larger than the measurement itself, the report is useless.
And that’s exactly what happened in May.
New Home Sales were measured to have fallen by 0.6 percent but that data point was dwarfed by its 17.8 percent Margin of Error, The “headline data”, in other words, was just a guess.
The press reported it anyway.
Nonetheless, as it relates to the economy, falling home inventories are a positive. Having 10-plus months of homes on the market is still high historically, but a definite improvement over what we saw earlier this year.
So long as low mortgage rates and aggressive pricing persists from builders, we expect even less supply in the months ahead.
About the Author: James K Barath is a Certified Mortgage Planning Specialist, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James Barath today for your Borrow Smart Analysis - the CALM Approach to Borrowing ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy! 