Housing Rebounds (err or does it)

Headlines all across the NAR owned and controlled MSM scream that housing is back baby!! New home sales were up in September screams Yahoo. New Home Sales rebound rants CNN. Woo Hoo! Let the good times roll! Now is the best time ever to buy.

Except hold the phone. Sales were up 5% from August but DOWN 23% from Sept 2006. And the MSM stupidity continues by comparing MOM instead of YOY.

Comparing month to month is idiotic for 2 reasons.

1. The obvious volatility shown in any short term data. This applies to housing to stocks to weather, you name it. You can't compare August to Sept and have any meaningful interpretation. August home sales were practically non-existent. It makes sense that when you hit rock bottom even a little bit of activity in Sept would seem like a big gain.

2. New Home Sales reported for Sept are contracts to buy not actual sales. I could go out and sign a contract to buy 100 homes today. I very much doubt I will get financed to buy them all. These contracts are meaningless. Comparing Sept to Sept however compares actual Sales to contracts. And here we see a 23% drop which is meaningful. Of course the MSM barely mentions this and if it does it's all the way at the end of the article.

Suppose you made $10,000 income in Sept 2006. By August your income was down to $6,500. And in Sept it went up to $6,650. Would you be celebrating? Not me. Yet this is exactly what happened and the media is partying like it's 2003.