October 26, 2010
By NAR Research
Each month NAR releases the latest reading on existing-home sales, median prices and inventories. As one of the most closely followed barometers of the real estate economy, there is considerable news coverage in print and on the major cable and broadcast channels. Data can be surprising, especially when it differs from what is expected by the legion of analysts who follow the real estate markets. These surprises, when they occur, lead to more intense media coverage than usual.
At times, this coverage can be somewhat perplexing, especially when there are “apples to oranges” comparisons. In the latest instance, September existing-home sales rose 10 percent compared with August, but were down 19.1 percent compared to the same month one year earlier. In one example, a newspaper headline touted the month-to-month rise in national home sales, but gave a much more subdued–one could even say grim–view of local conditions using data comparisons on a year-to-year basis. In another example, the news coverage raises the stakes by putting the latest data in terms of the largest increase or decrease, or in terms of record high or low. While these statements are usually factually accurate, they often miss the point by not putting the latest data point in full context. A record low may imply that there has been a large decrease or, alternatively, if the data is volatile, it may be part of a noisy trend, where month-to-month comparisons are less informative. Such statistical confusion, while likely done with no negative intent, adds to the mixed messages that consumers are seeing when they pick up a newspaper or tune in to the evening news.
The next time you see a headline that grabs your attention take a moment to make sure that everything adds up.