The New Home Sale stats were released yesterday and provided a “pick and choose” resource for how the housing market actually performed. Every month, the report provides a plethora of reasons why you shouldn’t rely on data that is adjusted, re-adjusted and shows a wide range of results.
Here’s what I mean, as shown in this text taken from the very top of the released New Residential Sales report [pdf] 
Sales of new one-family houses in May 2006 were at a seasonally adjusted annual rate of 1,234,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.6 percent (Â±13.1%)* above the revised April rate of 1,180,000, but is 5.9 percent (Â±10.8%)* below the May 2005 estimate of 1,311,000.
In other words, the question is whether May 2006 New Home Sales were:
A. up 4.6% from April 2006, but down 5.9% from May 2005
B. up 17.7% from April 2006, but down 16.7% from May 2005
C. down 8.5% from April 2006, but up 4.9% from May 2005
D. down 8.5% from April 2006, but down 16.7% from May 2005
E. up 17.7% from April 2006, but up 4.9% from May 2005
F. somewhere in between
G. All of the above
The consensus of news coverage opted to use the nominal figures provided suggesting new home sale gains.
- New-Home Sales Rise 4.6% in May [LA Times]  _Sales of new single-family U.S. homes again defied predictions of a slowdown in May and rose 4.6%, according to a government report Monday that signaled resilient demand in the important housing sector._
- New-home sales rise 4.6% to 1.234 mln [MarketWatch]  _Home builders say May’s figures ‘too good to be true’_
- US Treasuries sag on surprise new home sales jump [Reuters]  _U.S. Treasury debt prices dipped on Monday after monthly new home sales rose unexpectedly suggesting the critical housing sector was not sagging as quickly as some believed._
UPDATE: As a reader just pointed out, the confidence level for the monthly change in the Northeast of -7.9% had a confidence interval  of 30.9%. The West was nearly as bad.
Thats crazy inaccurate. In other words, don’t use their month over month housing stats. Imagine doing month over month real estate stats in a local market with a much smaller data set?