The Mess That Greenspan Made: New homes sales rise - don't get too excited

New homes sales rise - don't get too excited

Wednesday, March 25, 2009

Housing market news increasingly reminds me of some of my uranium stocks where, after tumbling 60 or 80 percent, five or ten percent moves off of the bottom may sound good but, in the scheme of things, are just a drop in the bucket in the move back toward previous levels.

Such was the case today in this report(.pdf) on the 4.7 percent increase in new home sales.
It's hard to get too excited about this.

2 comments:

Anonymous said...: Hi Tim -- Actually, my take would be a bit different (on the home sales, not stock prices).

Nobody but Yun expects new home sales to get back to their manic bubble-era levels. But I think it will be an important event when they stop falling. So a 5% rise - if it is sustained - is significant.

In this case if you look at your graph, there have been many blips up even bigger than this through the whole decline. So I agree with the conclusion, nothing to get excited about from this particular data point.

But I also think that if we saw a sustained rise, or non-fall, however slight, that would be notable (while acknowledging that a return to bubble levels ain't gonna happen).

Rich; March 25, 2009 8:30 AM
Anonymous said...: Tim

noone has any idea if there was a "rise" since January or not

+4.7(+-18.3)% [ratio 1:4] means :
"we don't know if it went up or down"

it is a number derived from statistical methods, and so should be so viewed.

and in statistics,
1+-4 means "consistent with 0" or "we don't know".

If I were to claim to my physics colleagues that my result was slightly positive, with an uncertainty 4x bigger than the number, my credibility and ability as a scientist would be severely tarnished.

as so it should be here.

NOw, -41+-4.7 YOY [ratio 8:1] means:
"Holy Shit !!"

-marcello; March 25, 2009 9:29 AM

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