In her report yesterday on existing home sales, Reuters reporter Kristin Roberts chose to emphasize a one-month decline in December and negative anecdotal information from the Midwest, while failing to give her readers favorable big-picture data that had been handed to her on a silver platter.
Here's how the press release from the National Association of Realtors that served as the starting point for Ms. Roberts' report began:
Existing-Home Sales Down in December But 2005 Sets a Record
Existing-home sales declined in December but easily set an annual record, according to the National Association of Realtors®.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 5.7 percent to a seasonally adjusted annual rate1 of 6.60 million units in December from an upwardly revised pace of 7.00 million in November. Sales were 3.1 percent lower than a 6.81 million-unit level in December 2004.
There were 7,072,000 existing-home sales in all of 2005, up 4.2 percent from 6,784,000 in 2004. This is the fifth consecutive annual record; NAR began tracking the sales series in 1968.
Now no one would expect Ms. Roberts to copy and paste what the NAR gave her, or not to bring in other relevant information where appropriate. But it's fair to ask her not to omit material facts. Here are paragraphs 1 through 8, plus paragraphs 11-12, from her report:
December existing home sales fall but 2005 a record
Home resales in the United States fell 5.7 percent in December to the lowest level since March 2004 as the market cooled on the back of slowing Midwest economies and the loss of investors, a trade group said on Wednesday.
But for the year, 7.072 million existing homes were sold, making 2005 the fifth record year in a row, the National Association of Realtors said.
"So, 2005, when we look back, was the best year in housing in recent memory, probably of all time," said David Lereah, the group's chief economist.
December's sales rate of 6.6 million units compared with an upwardly revised 7.0 million unit pace in November. That includes both single-family homes and condos.
Analysts had expected overall sales to decline to a 6.90 million unit annual rate in December from an originally reported 6.97 million unit rate the previous month.
"Even though we are close to the peak and we are still going to see spurts in activity, we will eventually see the housing market slow," said Anthony Chan, chief economist at J.P. Morgan Private Client Services in Columbus, Ohio.
December's drop in existing home sales signaled further cooling in the U.S. housing market after five years of gains that shattered construction and sales records and sent prices up more than 55 percent nationwide.
The decline in total sales for the month was driven by a 6.8 percent drop in single-family home sales. Condo sales rose 1.6 percent in December.
..... "This is not a boom-related cooling in the housing market. These are a lot of non-boom (metropolitan areas), metros that never experienced a real estate boom, metros in Texas, metros in Ohio, metros in Michigan that are experiencing a slowdown because of a slowing in the economy," he (Lereah) said.
In fact, while the number of homes available for sale nationwide declined by 4.4 percent to a 5.1 months' supply at the current sales pace, inventories in non-boom markets increased, Lereah said.
Here is some of the data I extracted from the one-page PDF the NAR linked to their press release for full-year existing-home sales, percentage changes in December ("December" label added by me), and median sales prices (medians are for all sales that occurred during the year):
Here are salient facts Roberts owed her readers:
- She totally ignored the 4.2% full year-over-year existing-home sales increase NAR noted, and, for that matter, the remarkable increase of over 14% in the past two years.
- The anecdotal evidence she attempted to construct from her selected outside experts to support a contention that "the market cooled on the back of slowing Midwest economies" doesn't hold up for the region as a whole. No hard data for individual "Midwest economies" was presented. But the Midwest's seasonally adjusted existing-home sales performance in December was the second-best of the four regions compared to both November 2005 and December 2004. Midwestern median sales prices also increased nicely from 2004 to 2005, and the region's December's median sales price of $173,000 (not seasonally adjusted, and not shown) was higher than those of the previous three months.
- Since she appeared so willing to include contrarian quotes, Ms. Roberts could have balanced the report by paraphrasing these very important points made by Mr. Lereah in the press release: "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last year’s record.”
Overall, Ms. Roberts' report leaves one with an incorrect impression of a housing market at the beginning of a decline. She succeeds in that attempt by ignoring any and all data and comments that would jeopardize her premise. A very poor, and very biased, performance.
Cross-posted at BizzyBlog.com.