by Calculated Risk on 9/26/2022 12:31:00 PM
Today, in the Calculated Risk Real Estate Newsletter: New Home Sales and Cancellations: Net vs Gross Sales
A brief excerpt:
When looking at new home sales, we are interested in net sales for each month, however the Census Bureau reports gross new sales. A simple equation would be:
In the long run, the cancellation terms balance out, and the Census Bureau numbers are what we want. In other words, Sales(net) = sales(gross). But in the short run, when cancellations increase, the Census Bureau overestimates sales; and when cancellations decrease, the Census Bureau underestimates sales.
The bottom line is – with rapidly rising cancellations – the Census Bureau will overestimate sales tomorrow (and underestimate new home inventory).
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/