Data on June 2009 new residential sales were released by the Commerece Department Monday, and government officials were quick to promote the news with a positive spin.
“The evidence is clear that home buyers are taking advantage of Recovery Act tax incentives, declines in home prices and relatively low mortgage rates,” U.S. Under Secretary for Economic Affairs Rebecca Blank said. “Both new and existing homes have become more affordable. While the economic environment remains difficult, as more Recovery Act dollars hit the streets, we anticipate that it will further bolster the economy in the coming months.”
On the heels of the release from the Commerce Dept., the media trumpeted the data. The Associated Press reported, "...the housing market is finally bouncing back from the worst downturn in decades."
CNBC's
Power Lunch Host Bill Griffeth and reporter Diana Olick
discussed the numbers, saying, "It was the economic piece of data of the day," and, "No question it was a huge number today beating the streets expectations by alot."
Sure, it's great that new home sales were up 11% in June, but what the media fails to point out is that when you look at the numbers in a proper perspective instead of focusing only on a monthly gain, you'll find that the June new home sales were the worst June new home sales since 1963! Floyd Norris points this fact out on
his blog: "There are twice as many households in America as there were then (1963), so relative to population this was the worst June ever, by far."
Maket analyst and commentator Barry Ritholtz publishes a blog called, "The Big Picture". Barry does a
nice job of showing exactly how the 11% increase number doesn't really look all that spectacular when analyzed and compared to other important figures. Barry concludes, "Real Estate is now getting worse more slowly." Nothing like being able to put a positive spin on something that's actually still negative!
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