Saturday, January 12, 2008

WSJ Housing Inventory Story turns Up into Down

You may have seen the Wall Street Journal story headlined "Housing Supply Lower, Yet Ample" on January 8, 2008. A lot of people (including me) often just read headlines and would draw the conclusion that the housing market is still soft but might be improving because inventories are down. That conclusion doesn't square with other information I've seen, so I kept reading. The third paragraph contains this tidbit; "The decline is roughly in line with the usual pattern for December, when many potential sellers keep their homes off the market because of the holidays."

To their credit, the Journal did include this information, but it makes you wonder if the person who wrote the headline read that far into the story. Housing inventory is seasonal, and you need to adjust for that. One way to do that is to compare to the previous year's period (e.g., compare December 2006 inventory to December 2007). That information is in the fourth paragraph; "Total listings at the end of December were still up about 23% from a year earlier in the 17 metro areas for which comparable figures from December 2006 were available."

In my book "up about 23%" does not equate to "roughly in line." The headline for this story should be something like, "Housing Inventory Up Substantially Over Prior Year."