Mortgage News in the Carolinas
Posts tagged Margin of Error
New Home Supplies Fall To An 18-Month Low
0173 days
by Geoff Brown
in Housing Analysis
If you plan to buy of new construction in Carolinas sometime in 2012, don’t expect today’s low prices. Like everything in housing of late, the market for newly-built homes appears to be stabilizing and, in some markets, improving.
As foreshadowed by this month’s strong Homebuilder Confidence survey, the Census Bureau reports that the number of new homes sold rose to a 6-month high in October, climbing to 307,000 units on a seasonally-adjusted, annualized basis.
A “new home” is a home that is considered new construction. It’s the opposite of an “existing home”.
Home buyers are comparing new construction to home resales and liking what they see. At the current sales pace, the nation’s complete new home inventory would now be depleted in just 6.3 months. This marks the lowest home supply since April 2010 — the last month of the last year’s federal homebuyer tax credit.
By building only to meet new demand, builders are keeping home supplies in check, and home prices stable. They’ve also found a niche market – 80% of homes sold last month sold for less than $300,000.
Split by region, the Census Bureau reports October’s New Home Sales as follows :
- Northeast Region : +0.0% from September 2011
- Midwest Region : +22.2% from September 2011
- South Region : -9.5% from September 2011
- West Region : -14.9% from September 2011
Unfortunately, the data may be incorrect.
Although the October New Home Sales report says that sales climbed 1.3 percent last month, the government’s data was published with a ±19.7% margin of error. This means that the actual New Home Sales reading may have been as high as +21.0 percent, or as low as -18.4 percent. Because the range of values includes both positive and negative values, the Census Bureau assigned its October data “zero confidence”.
As home buyers, then, we can’t take our market cues from the published data. Instead, we should look to other metrics including Housing Starts data and the aforementioned homebuilder confidence survey. Each points to strength in the new home market, and foretells higher home prices in 2012.
If you’re in the market for new construction, consider writing an offer soon. Home prices remain low and mortgage rates do, too — a combination that keeps home payments low. Next year, that may not be the case.
New Home Supply Falls To 16-Year Low
0389 days
by Geoff Brown
in Housing Analysis
After posting an all-time low in February, New Home Sales rebounded strongly last month.
Based on joint research from the Census Bureau and HUD, 300,000 new, single-family homes were sold on a seasonally-adjusted, annualized basis in March. It’s an 11 percent improvement from February, and right in-line with the 6-month average.
The supply of available new homes improved, too, in March, falling by close to a full month.
At the current pace of sales, the entire new home housing stock would be sold in 7.3 months. This is the second-best reading in a year, a statistic partially-supported by the relatively small number of new homes on the market.
There are now just 183,000 new homes available for sale across Charlotte and the country. That’s the smallest reading since the Census Bureau started to keep New Home Sales records beginning in 1995.
However, it should be noted that the March New Home Sales data is suspect. The reading’s margin of error exceeds it actual measurement by almost double. It’s possible that sales volume fell in March instead of rising, therefore. The Census Bureau says as much in its footnotes:
The change [in new home sales] is not statistically significant; that is, it is uncertain whether there was an increase or decrease [in March 2011].
We won’t know for certain until future data revisions are made.
If you’re a home buyer , though, and want to stay ahead of the market, you won’t want to take chances. If the Census Bureau finds its data to be accurate after revisions are made, new home prices will already have started to rise.
You may get your best home value by buying sooner rather than later.
Housing Starts Ease 0.7 Percent In June — 7x Better Than The Headline Data
0669 days
by Geoff Brown
in Housing Starts
Single-family Housing Starts eased lower last month, falling by 0.7 percent from May, or 3,000 units nationwide.
A “housing start” is a home on which construction has started.
June’s Housing Starts data is somewhat soft and may partially explain why home builder confidence dropped to its lowest level since April 2009, but for buyers and sellers in Charlotte , the Housing Starts report is not nearly as bad as headlines say.
This is because when the press reports on Housing Starts, it doesn’t single out single-family homes. The press lumps every type of home into a single, giant reading. As a result, news outlets are reporting Housing Starts down 5 percent — a somewhat misleading figure.
The 5 percent figure is actually a combination of 3 separate housing types:
- Single-Family Housing Starts
- Multi-Unit Housing Starts (2-4 Units)
- Apartment Building Housing Starts (5 or more units)
But, single-family homes are what most Americans purchase. This is why the single-family starts data is more relevant than the combined figure commonly reported by the press. 2-4 units and apartment buildings are a different realm of buyer.
That said, though, we can’t even be sure that June’s Single-Family Housing Starts report is accurate. As noted in the Department of Commerce’s press release, the data’s margin of error is 10.7 percent which means the reported results are of “no confidence”.
In other words, there is no statistical evidence to prove the actual change was different from zero.
If Housing Starts did, in fact, drop in June, it will help to reduce the housing inventory, which will provide support for local home values. For home sellers, this could be good news. Fewer homes for sale means less competition for buyers.
