Lies and statistics: Home sales did NOT rise

Posted Oct 25th 2007 4:25PM by Julie Tilsner
Filed under: Bad News, Blogs, Insider Blogging, Economic Data, Headline News, Housing

There are lies, damned lies, and statistics. Most people attribute this phrase to 19th century British politician and writer Benjamin Disraeli (it was later popularized by our own Mark Twain). But more recently, financial blogger Barry Ritholtz has embraced the motto as his raison d'etre.

Ritholtz writes the popular financial/cultural blog The Big Picture, where, among other things, he loves to take the headline numbers and debunk them. He understands the numbers. By day he's a market strategist and fund manager.

Today he rolls his eyes and examines the latest U.S. Census and Dept. of Housing and Urban Development numbers that show a 4.8% rise in new home sales.

What the mainstream press either overlooks or fails to mention is that pesky little margin of error. For September's numbers, for example, the margin of error renders the data statistically insignificant.

So statistically speaking, there was no rise. Nothing getting better on the housing front.

Damned lies and statistics. Mark Twain would surely be a fan of the Big Picture.

Tags: Barry Ritholtz, BarryRitholtz, home sales rise, HomeSalesRise, housing, housing data, HousingData, margin of error, MarginOfError, statistics, The Big Picture, TheBigPicture, U.S. Census Bureau, U.s.CensusBureau

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Reader Comments (Page 1 of 1)

10-25-2007 @ 7:16PM

DennisMFL said...

The 735,000 revised August number "shocked" many as it was much worse than expected - an eleven year low according to CNN. The September number was also dissapoiting as economists were looking for 775,000 units, not the 770,000 number reported. No doubt the 770,000 number will get revised even lower (as has been the trend) and likely show a loss for the month, not the gain as reported today. These numbers definately reflect a continued erosion of the housing market, and I see nothing to suggest that this trend won't continue.

But to listen to the media you'd think that we have some sort of turn around going on. Today's AP headline read "New Home Sales Rebound in September." Really?? Rebounding?? You mean the worst is over?? Are you kidding me!? How about reporting the truth for once.