Yesterday’s new home sales report from the Census Bureau triggered an ebullient response. Big media used words like “surge; soar; rise sharply; above expectations” to describe it. The Wall Street Journal said, “Sales of new, single-family homes rose by 5.7% to a seasonally adjusted annual rate of 552,000.” The headline number they reported reflected the monthly seasonal adjustment and sampling error multiplied times 12. The number crushed analysts’ expectations. The pundits were giddy.

So what is the reality behind that headline number? In honor of the great Yogi Berra, I quote one of his most insightful quips. “You can observe a lot by watching.” I have been carefully watching the actual data in this report for many years. I have had the benefit of “watching” from the perspective of having had my boots on the ground. I sold houses, including new houses, early in my working life. I also worked for many years as a commercial real estate appraiser, where I frequently appraised new housing developments, both pre-development, during the sellout period, and in some cases, after they failed. I have experienced first hand how people actually act when purchasing houses.

So with that perspective, here are a few points that Big Media didn’t mention that I think are important. First, the Census Bureau prominently points out that their headline, annualized, seasonally finagled number, has an error range of +/- 16.2% at a 90% confidence interval. In other words, the headline number could be 641,000 when all the data is in, or it could be 463,000.

The Bureau estimated from its actual count of building permits plus a statistically derived estimate of contracts signed where permits had not yet been pulled, that 45,000 new houses sold (went under contract) in August. The Bureau will continue to hone in on the actual number over the next 4 months as more data becomes available from builders.

45,000 is 1,000 more than the July estimate. That’s actually pretty good, because over the past 10 years, August has typically been a down month from July, with an average decline of 2,000 units. This year the August gain was similar to last year’s 1,000 unit increase for the month. The total of 45,000 units was 25% higher than August 2014’s 36,000 units.  And it is almost double the August 2010 total of just 23,000 units.