Old Media Again Claim Declining New-Home Prices by Ignoring Changes in Regional Mix
Yesterday, Brent Baker at NewsBusters caught the Old Media emphasis on the decline in existing-home unit sales, even though the median existing-home price went up. CBS and Katie Couric apparently invoked the Great Depression in their existing-home sales commentary (I think any number of those 90 and older could say: "I knew the Depression, and Katie, this is no Depression.").
Today we have the Commerce report (PDF) that new-home sales volume is down, AND the media crowing (unfortunately fed by the lack of Commerce Dept. detail) that the nationwide median new-home selling price is down:
The median price of a new home sold last month dropped to $237,900, down by 2.2 percent from a year ago. It was the biggest year-over-year price drop since a 6.5 percent fall in April. The median price is the point where half the homes sold for more and half for less.
But at the risk of sounding like a broken record, I'm forced to make the same point I made a couple of months ago in more detail -- by the time you consider changes in the regional mix in home sales, you're left with an overall new-home market where regional prices are holding steady or perhaps even slightly increasing -- and definitely NOT in decline.
A quick look at the following figures will illustrate the point:
The drop-dead obvious point to anyone looking at these figures for more than 30 seconds is that the regional mix of new-homes sales is weighted more heavily in the less-expensive South and Midwest regions. Of course the national median selling price will go down if prices are steady (or even slightly increasing) and you mix 5% or 6% more homes from cheaper regions, supplanting 5% or 6% from the more expensive ones.
People who are doing business reporting for a living are making the same lazy mistake month after month in reporting housing-market conditions. It's getting very tiresome. Reasonable people have to wonder if there's no further looking into the details simply because the topside result fits the "GOP is in the White House, the economy must be bad" template.
UPDATE: Quarterly data by region obtained from the Census Bureau prove the point:
Year-over-year new-home median sales prices are higher in three out of four regions (WAY higher in the West and Northeast), as are Q107's medians compared to Q406's. Yet the nationwide median is only up a few percentage points, primarly because of the lower-cost South’s increasing percentage of total sales volume.
Slightly revised from original post at BizzyBlog.com.