When it comes to economic series, any one datapoint must be taken with a pinch
of salt. And when the datapoint is such an outlier compared to previous reports
in the series, one should discount it almost entirely. Case in point: today’s
new home sales report.
There are all manner of weird numbers here: the headline rate of new home sales
was much higher than expected, at 981,000, while the median and average sales
prices were much lower than expected, at $229,100 and $299,100 respectively.
The fact that the numbers are unexpected, of course, is in and of itself reason
to believe that they might well be revised significantly in future.
It’s certainly worth noting that the 16.2% month-on-month rise in sales has
a margin of error of 13 percentage points. So I’m not drawing any conclusions
from this one report, even if Bloomberg’s Bob
Willis thinks it’s "a sign low lending rates and incentives may be
reviving demand". Especially since if you look at a graph
of mortgage rates over the past few months, it clearly shows them going up,
rather than down.