CHART OF THE DAY: Why The Home Sales Decline Wasn't Significant

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While U.S. new home sales reportedly fell 3.6% in September from August, this change was not statistically significant.  Why not?  Because the margin of error was +/- 10.6%.

That means the range of possibilities was actually 6.6% to -13.8%.  So the government doesn’t even know if home sales rose or fell:

Department of Commerce: If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease

In fact, if we break down the data into its four regional components, only the Mid-west showed a statistically significant sales change (positive) in September. All this data can be found here.

In the Midwest home sales reportedly rose by 34% with a confidence interval of 2.3% – 65.7%. 

Thus the only statistically significant conclusion from this release was a positive one. So either don’t freak out about reported -3.6% figure, since it wasn’t statistically significant — or take the release as a slight sign of statistically significant sales growth in the Midwest.

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