Census Bureau Revises Away 25% of Pandemic-Era Price Spike of New Single-Family Houses
by Wolf Richter • May 23, 2024 • 4 Comments
OK, file this away under the category, “Things that drive me nuts.”
The Census Bureau and the Department of Housing and Urban Development jointly produce the data on new single-family houses: permits, construction starts and completions, inventories at all stages of construction, sales at all stages of construction, median and average contract sales prices, and related data.
Whatever happened during the pandemic in collecting and processing the data, the Census Bureau and HUD decided that the pricing data was totally screwed up and needed to be fixed, and they dramatically revised the sales prices that had been collected during the pandemic.
And today, as part of this, they announced huge revisions to the pricing data going back through 2020. For example, they chopped off $36,000 from the median price at the peak in October 2022, taking it from the old $496,800 to the new-and-improved $460,300.
We look at the three-month moving average because it irons out much of the month-to-month squiggling. The revisions chopped off $38,000 from the three-month moving average of the median price at the peak, taking it from $480,000 to $442,000.
In other words, the revisions unwound $38,000, or 25%, of that $150,000 pandemic-era spike. The spike, based on the old prices went from $330,000 in April 2020, to $480,000 in October 2022.
There were three phases of these revisions:
- April 2020 through January 2023: All median prices were revised down.
- February 2023 through December 2023: Median prices were not revised at all.
- January 2024 through March 2024: All median prices were revised up.
This chart shows the old median prices through March (blue line) and the revised median prices through April (red line), as a three-month moving average.
For your amusement, here is the chart with the monthly data, not three-month moving averages:
The announcement.
The Census Bureau, when it announced the revisions today, provided some details, including the five items below. Note #4:
- “The sales price range groups in Table 2, ‘New Privately‐Owned Houses Sold, by Sales Price’ have been updated to better reflect the current distribution of new home prices.
- “New price groupings have also been introduced in our time series file ‘New Houses Sold and For Sale by Price Range.’
- “Data between January 2020 and March 2024 have been re‐calculated incorporating any additional data and revisions received since initial publication and re‐released in the new price groupings.
- “All tables containing historical median and average sales price data have been revised between January 2020 and March 2024.
- “With this release, seasonally adjusted estimates of housing units sold, housing units for sale, and the months’ supply of new housing have been revised back to January 2019.
Data collection was totally screwed up during the pandemic?
This single-family residential data is collected as part of the broader Survey of Construction. The Census Bureau explains the details in the
Methodology. It starts with construction permits that are then followed by field staff, including visits to the permit offices. A sample of projects are then followed through various stages of construction, to determine starts, completions, and sales. This data is obtained from builders via surveys:
“The Census field representatives use interviewing software on laptop computers to collect the data. Facsimiles of the computer-based questionnaires are provided to respondents to familiarize them with the survey. These facsimiles show the questions that are asked for housing units in single-family buildings on Form SOC-QI/SF.1 and in multifamily buildings on Form SOC-QI/MF.1….
Then the data has to be compiled and extrapolated to the overall US economy.
Now imagine doing all this in 2020 and on, when people were working from home, or pretending to work from home, when travel and other activities were restricted, when all kinds of shortages and delays and huge cost increases drove the construction industry up the wall, so to speak….
Whatever happened, the Census Bureau and HUD decided that somehow the pricing data got totally screwed up and needed to be fixed, and they revised the figures that were collected during the pandemic. But the sales and inventory data of new single-family houses going back to 2020 were revised in relatively minor ways, compared to the pricing data.
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