Census New Home Sales Estimates Much Lower Than Reality

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Housing analyst Ivy Zelman, much renowned during her time at Credit Suisse for calling the crash of the subprime mortgage and charting adjustable rate mortgage resets, tells CNBC that the widely reported Census Department’s data on sales of new construction is way off.

In January, Zelman’s survey suggested that gross new home orders increased 11 percent on a seasonally-adjusted basis, yet the Census data reported a 13 percent decline. While Zelman was estimating a new home sale pace of 395,000, the Census reported 284,000.

“While it would appear that the Census numbers are troubling for new home sales… we believe the new home sales pace is materially above what the Census has reported in recent months, suggesting there is not as much ‘doom and gloom’ on the new home side as what is being widely reported,” Zelman tells CNBC.

So why do the two diverge?

Zelman’s researchers say it may be the very small Census sample size, which leads to a huge margin of error (in the Northeast it was +/- 82.5 percent in January.)

Zelman’s survey covers 13 percent of the total new home market, and is made up entirely of private builders. The public builders represent another 30-40 percent of the market.

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