One of the great things about government data is the entertainment value it provides. Among the fuzziest of numbers are new home sales, which are subject to both sampling bias and opaque seasonal adjustment factors.
Perhaps a few other weaknesses are among them as well, such as counting contracts signed but never accounting for failed closings (which happens regularly).
With that said, let’s turn our attention to the government new homes sales announcement, as faithfully reproduced by the mainstream media, which sent the stock markets higher.
New-home sales rebound from record low in June
WASHINGTON (MarketWatch) — U.S. sales of new homes had a better-than-expected rebound in June after falling to record lows in May.
Sales rose 23.6% in June to a seasonally adjusted annual rate of 330,000, the Commerce Department reported Monday.
New-home sales plummeted a revised 36.7% in May to a record low 267,000 level after a federal subsidy for home buyers expired. This is a steeper drop than first estimated. The government had initially put the decline as a 32.7% fall to 300,000.
Stocks got an immediate lift from the data.
Okay, two things need to be pointed out here. The first is that May’s record low disaster was revised downward by a whopping 33,000 units, or 11% (!) from its originally reported value. Removing this downward revision, the rebound would have been only 30,000 units, or 10% instead of the whopping 23.6% reported increase. That’s a big difference. Such volatile revisions tell us that perhaps we shouldn’t place too much faith on any one release. A prediction here is that June’s numbers will be revised downward next month.
by idoctor 
