I follow both Forbes and AOL Real Estate on Twitter. I have always viewed Forbes as the standard of excellence in financial journalism, but in my view, this morning they got schooled by AOL in responsible reporting. Both linked to recent stories on the real estate market on Twitter this morning, and both could not have reported things in a more polar opposite manner. According to Forbes,
After months of encouraging signs, the housing market is starting to lose steam. The National Association of Realtors said pending home sales, which track houses under contract, dropped 0.4% in June, after rising 6.7% in May.
It was as if AOL was reporting about real estate in another planet:
Sales of new U.S. single-family homes vaulted to a five-year high in June, showing little signs of slowing in the face of higher mortgage rates.
The Commerce Department said Wednesday sales increased 8.3 percent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008.
Both reports are within a few business days of each other and address the June 2013 market. Why the different conclusions? More importantly, who is right?
I believe that Forbes dropped the ball. Real estate is a seasonally cyclical market. Any period is evaluated responsibly by comparing it to the same period the prior year. You don’t compare bathing suit sales, for example, from December to July. And you certainly don’t compare retail sales in February when returns are high to the crazy period in December around the holidays. You compare apples to apples.
Forbes was factually accurate in reporting that June sales were down less than half a percentage point in June 2013 from May 2013. But their conclusion, that the market is “losing steam,” is misleading, because the spring market always tails off as summer comes because of market cycles, just as retail sales peak in December and tail off in February.
AOL made the accurate call. In responsibly comparing June 2013 to June of 2012, they tell the real story: Sales are up almost 40% from the same time last year. That does not speak to a softening market in my opinion, it speaks to a market that is still undeterred from the rate hike and may in fact still be too hot.
I’m actually surprised that Forbes would blow it like that. Who compares May to June? I have spoken with my share of real estate reporters, and by and large they understand the market cycle and how statistics can be interpreted. Forbes, of all media outlets, should know better.
AOL Real Estate 1, Forbes 0.