A series of conflicting data on housing and consumers has muddied the waters of late, with the Census new home sales release showing an increase for the fifth consecutive month, while the National Association of Realtors’ report on existing home sales showed an incremental decline. In a similar contradiction, the University of Michigan consumer sentiment survey increased to its highest level so far this year while the Consumer Confidence Index from the Conference Board dropped unexpectedly.

New home sales as measured by the Census increased for the fifth consecutive month in August which is the first time that has happened since May-September 1997. Seasonally-adjusted new home sales increased 0.7% from the previous month to an annual rate of 429,000 units. This followed a downwardly revised 6.5% increase in new home sales last month in July. New home sales for the previous three months were revised higher by 9,000 units. On a year-over-year basis, new home sales are still down 3.4% from the 444,000 figure in August 2008 and 38.6% less than the August 2007 figure of 699,000. The annual pace of new home sales is now at their highest levels since September. A decline in new home prices, lower mortgage rates, and the upcoming expiration of the government's homebuyer tax credit have sparked demand recently. For more information on the New Home Sales release, click here.

In August, annualized sales of total existing homes declined 2.7% from July levels to 5,100,000 units. Existing home sales had recorded four consecutive monthly increases before easing in August. Existing single-family home sales declined 2.8% from last month to 4,480,000 units while condo and co-op sales were down 1.6% from July to 620,000 units. Sales of existing homes are up 3.4 percent from the 4,930,000 units in August 2008. This is the second straight month that existing home sales have recorded a year-over-year increase. For more information on the Existing Home Sales release, click here.

The Consumer Confidence Index as measured by the Conference Board declined marginally in September following a rebound in confidence last month. The index fell to a reading of 53.1 in September from a revised August figure of 54.5. The index is still down from its levels this time last year when the index stood at 61.4. Both component indexes also declined in September. The present situation index dropped from the previous month to a reading of 22.7 from 25.4 last month. The expectations index declined slightly to 73.3 from 73.8 in the previous month. For the same month, the University of Michigan Consumer Sentiment index rose in September to its highest level since January 2008. September's final reading of the index increased to 73.5 following the preliminary reading of 70.2. The consensus expected a much more modest increase to 70.5. For more information on Consumer Confidence data, click here.

So what is really happening? As one might guess, there is not a strong trend in either direction, which dovetails with common perceptions of economic conditions. With the ranks of the unemployed swelling, job losses continuing (albeit at a slower rate), and other economic challenges remaining, it is unlikely that we will see any sudden surge in either consumer sentiment or home buying trends in the near term. Conversely, the conflicting numbers are also evidence that we are not in a clear trend of decline in either housing or psychology. In short, we appear to be at the bottom, or at least a bottom, and in the coming months we will likely see additional volatility in various data, especially if they are based upon a small sample size.

The current volatility provides an important reminder that we should not mistake a single month's worth of data as a new trend without supporting evidence. In that context, there certainly has been a slow but steady trend of stabilization so far this year from most of our indicators. But should the current volatility continue, we may need to re-assess whether the trend of stabilization is really continuing or whether we have stalled while waiting for broader economic fundamentals to improve.