New-home sales soared in April, an unexpected surge marking the biggest climb in 14 years, according to Commerce Department data. However, the average price of a home last month decreased to $299,100, from $324,700 in March. The median price was $229,100, lower than $257,600 in March.
News Alert from the Wall Street Journal
FOR MORE INFORMATION, see: http://wsj.com/article/0,,SB118000922765113338,00.html?mod=djemalert
Ray comments:
The methodology on the survey of new homes sales is so bad this is a misleading indicator at best, and perhaps an intentional effort to affect public opinion at worse. For one thing, it does not distinguish between price levels or different types of housing. Another important flaw is that the information comes from different builders every month. Some have sales, some have pared back. Over 50% of the figures come from the South, an area of much lower prices than the West, which would partially explain the 11% drop in prices from March 2007. Finally, the figures do not factor in the high rate of cancellations of the sales. The numbers are reported when the homes go under contract, not as closed sales. With all the cancellations (as high as 30% of sales) of what use is this indicator?? This indicator is worse than meaningless... it is downright fraudulent.
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