1/26/2012
By David Urani, Research Analyst

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The Census' December new home sales report put a bit of a dent in the rally, with overall annually adjusted sales down 2.2% month to month to 307k, below the 320k consensus. Drops in the Midwest and South offset gains in the Northeast and West. Certainly it's not a confidence inspiring number but I also think it's not as bad as it seems. The results mostly reflect volatility in the annual adjustments on the data. Mainly this month it was the South which showed a 10.1%, or 18k drop, after rising by 14.8%, or 23k, in the previous month. I think the better way to look at it may be to say that over the last two months, the South was up 5k.  On the other end, there was the Northeast which increased by 46.7% month to month; the Census cited a 69.6% margin of error on this one so it should be taken with a hefty grain of salt. 

We would have liked to see better from home sales, but we also feel the seasonal adjustments may be a bit too volatile to be reliable.  Given that the headline reading was only down 2.2%, the margin of error on the data means it could have really been either way I think. Beyond sales, median price was down but average price was up, and supply fell slightly.

David Urani
Wall Street Strategies