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Friday, August 24, 2007

New Home Sales, Revisions

by Calculated Risk on 8/24/2007 01:58:00 PM

Please see my earlier posts on New Home sales too: July New Home Sales and More on July New Home Sales.

The Census Bureau revises the New Home sales number three times (plus annual revisions). During a housing down turn, most of the revisions from the Census Bureau are down. This is important to keep in mind when looking at a new monthly report.

New Home Sales RevisionsClick on graph for larger image.

This chart shows the cumulative revisions for each month since sales activity peaked in July 2005 (annual revisions are not shown). The last time there was a positive cumulative revision (red column) was in September 2005.

The median change for the first revision is a decline of 1.6% (average decline of 1.8%) over the last two years.

The cumulative median change for the second revision is a decline of 3.6%.

The cumulative median change for the third revision is a decline of 4.8%. Since the last upward cumulative revision (Sept 2005), the range has been from a small decline of 0.2% in Dec '05, to a decline of almost 11% for May '06.

The new homes sales number today will probably be revised down too. Applying the median cumulative revision (4.8%) suggests a final revised Seasonally Adjusted Annual Rate (SAAR) sales number of 828 thousand for July (was reported as 870 thousand SAAR by the Census Bureau). Just something to remember when looking at the data.