There are government numbers, and then there is the truth

Orange County Register columnist Jon Lansner, a former SABEW president, notes in his real estate blog that government statistics are notoriously bad, yet many business and economics journalists continue to report them as if they were the truth.

He uses the new home sales statistics as an example:

“News flash! New homes sales nationwide were up a surprising 4.6% from April to May! Or was it actually up 17.7%? Or, were they really down 8.5%?

“The confusion comes from the government’s sampling error — standard in all polling efforts — in creating this estimate. Here’s the nut of the Census Dept.’s report:

“Sales of new one-family houses in May 2006 were at a seasonally adjusted annual rate of 1,234,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.6 percent (plus or minus 13.1%) above the revised April rate of 1,180,000, but is 5.9 percent (plus or minus 10.8%) below the May 2005 estimate of 1,311,000.”

Note the margin of error is so high that the positive numbers could actually be declines.

Read more here.