New Home Sales: Meaningless

When it comes to economic series, any one datapoint must be taken with a pinch of salt. And when the datapoint is such an outlier compared to previous reports in the series, one should discount it almost entirely. Case in point: today's new home sales report.

There are all manner of weird numbers here: the headline rate of new home sales was much higher than expected, at 981,000, while the median and average sales prices were much lower than expected, at $229,100 and $299,100 respectively. The fact that the numbers are unexpected, of course, is in and of itself reason to believe that they might well be revised significantly in future.

It's certainly worth noting that the 16.2% month-on-month rise in sales has a margin of error of 13 percentage points. So I'm not drawing any conclusions from this one report, even if Bloomberg's Bob Willis thinks it's "a sign low lending rates and incentives may be reviving demand". Especially since if you look at a graph of mortgage rates over the past few months, it clearly shows them going up, rather than down.