As a consumer, it’s very easy to be misled by newspaper headlines. Today provides a great example.
“Sales of Existing Homes Up 3.9% For The Biggest Monthly Gains In Three Years”
What was not mentioned in the headline was that total inventory rose by 5.9%, adding more supply than for which there is demand.
More supply usually pushes prices down and last month was no exception. The median sale price was down 1.3% from February 2006.
This is the second time this week that real estate headlines were misleading.
Monday, you probably saw this headline in your preferred news source: “9% Jump in New Home Construction“. The headline was followed by an article highlighting strength in the housing sector because more homes are being built.
Missing from the articles, though, was that the Housing Starts survey’s Margin of Error was 10.2%.
Without getting into the math behind it, if Margin of Error exceeds the measurement, the data measured is worthless. The headline could have read “1.2% Drop In New Home Construction” and that would have been “true”, too.
(Author’s Note: If you want to know more about how Margin of Error works, check Google and find an answer that suits you. Or, just trust me on it.)
Housing may be strong or housing may be weak. But, most likely, housing is both of these things. It all depends on your particular street because all real estate is local. Either way, look deeper than the headlines — there’s always more to the story.
