In last month’s episode of "Spinning Pending Home Sales"- we left David Lereah, chief economist of the National Association of Realtors, (NAR) getting excited about the November to December increase in pending sales:
Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the National Association of Realtors.
The Pending Home Sales index, based on contracts signed in December, rose 4.9% to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4% lower than December 2005.
This in spite of stating further in the report:
There is a closer parallel between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than there is with month-to-month comparisons.
So while Lereah states that year-over-year is the better indicator of sales performance, he chose to focus on month-to-month.
Fast forward to March 6, 2007 and the January sales report. Here’s what happened in January:
The Pending Home Sales Index, a leading indicator for the housing sector based on contracts signed in January, fell 4.1 percent to an index of 108.7 from an upwardly revised reading of 113.3 in December, and is 8.9 percent lower than January 2006.
So pending sales are down 4.1% MOM and 8.9% YOY- what’s options does that leave the NAR’s chief economist? This month Lereah says:
Aside from December, which got a lift from mild weather, the January index was the highest since last August. More importantly, there has been a narrowing trend from year-ago levels since last July when the index was 14.7% lower than a year earlier.
When the YOY and MOM don’t suit the spin- apparently showing that things aren’t looking as bad as they did six months ago is the expedient alternative. As for that narrowing spread- for January of this year, the YOY is down 8.9%. Last January the YOY was only down 1.7%. So much for the narrowing spread.
Stay tuned to this blog next month for the next episode of Lereah’s "Spinning Pending Home Sales." We’ll see if the spread narrows any between his comments and the data.
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here is a good quote that nails all the spin
How sad. All governments find it tempting to tweak the numbers they are judged by. But in doing this they deprive themselves of the best guide to future policymaking. And they also create a self-defeating spiral of distrust in which even the numbers they have not tweaked are disbelieved
Jan-Martin-
As long as we are content to be told what we want to hear, there is no motivation on the part of governments to be the bearer of bad tidings.
Until we recognize and demand accuracy and accountability, we will be fed the same old spin- and get what we deserve.
Sloppiness and spin will continue, regardless of the administation, until we learn that when you know the bad news, you can do something about it. If we pretend it will all go away, problems will continue to worsen until they are impossible to hide.
the quote was taken from an article about the uk government
unfortunatley this so wide spread….
the spin in almost every corporate press release or conference call sounds too often as lereah is the “ghostwriter”….
Jan-Martin-
Agreed.