The Commerce Department reported two positive pieces of economic data today. In February, new home sales rose 4.7 percent and durable goods orders rose 3.4 percent.

Photo by Jeff Sandquist, courtesy of flickr

These figures are positive, but I find them a tad frustrating because they always come with qualifiers. 

Let me explain.

The new home sales figure is supposed to measure the sales of newly built, single-family homes.

According to MarketWatch, this figure came in at a “seasonally adjusted annual rate” of 337,000.  This makes for positive news since economists were expecting 323,000 units.

Why it sends mixed signals:

1. The number could be inflated since it includes canceled contracts.

2. Last month’s activity and median sales price are down 43.8 and 18 percent, respectively, versus the same month last year.

3. The figure will eventually be revised, just like the others!

How can information be used to make decisions (I’m speaking of investments here) if the information itself wreaks of indecision? I wouldn’t use any single indicator to make a decision, but an ambivalent indicator doesn’t really indicate anything. 

BTW - This is a totally random thought, but someone once told me that meteorologists and economists are the only people who can give bad forecasts and keep their jobs. :)

Homebuilders’ confidence, as measured by their leading trade organization, the National Association of Home Builders, is way down. Turns out, there’s good reason for this.

According to this report from the Associated Press, the sales of new homes dropped by a record amount in 2007, while sales prices had their weakest showing in 16 years. If that’s not enough to shake builder confidence, what is?

According to the AP story, sales of new homes dropped by 26.4 percent in 2007 t0 774,000. That is the highest year-to-year drop on record.

At the same time, the median selling price of a new home barely moved at all last year. New home prices inched up 0.2 percent in 2007 to $246,900.

Here’s more evidence, as if anyone really needed it, that our current housing slump is a serious one. Real estate professionals may be preaching that the slump is nearing its end. The evidence, though, doesn’t support this view.

Each day, it seems, brings more bad news regarding the residential real estate market. Yesterday was no exception.

The U.S. Commerce Department reported that sales of newly built homes fell to a 12-year low in November. Such sales dropped 9 percent from October to November.

The numbers look even worse on a year-to-year basis: New-home sales were down 34 percent this November when compared to the same period one year earlier.

Sometimes I feel like a broken record, but this report offers further proof — as if anyone needed it — that residential real estate’s slump is a deep one, and one that won’t be easing anytime soon.

My advice? If you don’t want to hear any more bad news about the housing industry, don’t read the paper, don’t turn on the TV and don’t listen to the radio. That shouldn’t be too hard, right?