Home Prices: The Data Lies

In a recent Credit Suisse client-only homebuilder report titled Data Masks Grim Reality, Ivy Zelman and her team explain why the housing downturn is much worse than the data shows.  This report, released last September, is not anywhere on the internet, and I only found out about it when I read their Mortgage du Jour report recently.  Now that I am one of their channel contacts and thus on the distribution list for these reports, I am going to keep the content in my subscriber area. 

The report explains why housing starts remain high despite deteriorating condition in every market, why the OFHEO index and other data series "lie" (their words),  the real reason that builders don't lower prices (new info to me), and likely outcomes for the housing market.  The Case-Shiller index suffers from the same problems as the OFHEO index.

I've included a chart from their report which shows that months supply for the US is at the highest in the history of the data series.

Calfiornia Housing Forecast understands the problems with data, so I actually do a lot of research in the field.  Subscribers get access to the best analysis available.   Now, back to the story.  What are the specific problems with housing starts, inventory, sales, and pricing data?

Read more... 

Update on Monday, April 2, 2007 at 06:34PM by Schahrzad Berkland

I'd like to clarify that I do not post copies of reports or links to anybody's reports.   I am pulling some ideas from the report, as they relate to the research I've been doing.