New Home Sales Surge 11 Percent under New Data-Collection System
WASHINGTON (AP) -- A government report showed new home sales unexpectedly surging to a nearly 11-year high in January. But economists weren't sure what to make of it because of a data- collection change.
"It's so outlandish on the strong side," David F. Seiders, chief economist of the National Association of Home Builders, said of the 8.6 percent sales jump. "In our signals from the field, nothing says this was going to happen."
In advance, analysts were looking for a modest sales decline. So Tuesday's report from the Commerce Department briefly roiled the inflation-sensitive bond market until the government's disclosure of a change in its data collection methods sank in. The department said its field agents started collecting sales data with laptop computers, rather than with paper and pencil. It said that more accurate method likely resulted in "some upward bias" to the number but it used statistical methods to dampen erratic fluctuations. Economists and bond traders said the Commerce Department should have announced the methodology change in advance but said, in the end, the report had only a passing impact. "I'm sure some traders lost money. But then some traders made money too," said economist Sung Won Sohn of Norwest Corp. "I don't think the average person lost money because the market moved too fast." Bond prices, which were rising, sank briefly after the report. They quickly recovered but sank again during the afternoon. The Dow Jones industrial average, off modestly most of the day, dropped in the last hour of trading to close down 66.20 points at 6,858.72. Everett Ehrlich, under secretary of commerce for economic affairs, said the department did not announce the data-collection change in advance because "it wasn't obvious to us that it would have the effect that it did." In the long run, the change will produce more precise estimates, he said, and stood by the general accuracy of the January report. …