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Journalistic Inanity: Surprised by Supply and Demand

Associated Press: September new home sales rise by 2.7 percent. Sales of new homes recorded an unexpected increase in September as median home prices dropped to the lowest level in four years, the Commerce Department reported Monday…

In the universe most of us inhabit, crashing prices generally lead to more turnover.

0 Comments on “Journalistic Inanity: Surprised by Supply and Demand”

  1. #1 Seth Finkelstein
    on Oct 27th, 2008 at 5:08 pm

    Dan, I’m puzzled – why are you upset at this? The article doesn’t seem stupid: “Economists had expected sales would drop from the August level.”

    The supply/demand is two-factor equation – crashing prices may be overwhelmed by crashing income.

    So if the expectation of economists was that the supply side would dominate, but it turns out that when the data comes in, the demand side dominates (very slightly), that’s not inane at all.

  2. #2 Dan Gillmor
    on Oct 28th, 2008 at 4:20 pm

    The economists didn’t figure on prices dropping as much, from what I can see. The point remains: supply and demand still works.

  3. #3 Delia
    on Oct 28th, 2008 at 7:42 pm

    re: “The economists didn’t figure on prices dropping as much, from what I can see. The point remains: supply and demand still works.”

    so then what is the “inanity” you talk about?

    “Sales of new homes recorded an unexpected increase in September [as a direct result of the fact that, surprisingly,] median home prices dropped to the lowest level in four years” –> it was a surprise that the prices dropped as much as they did and this caused an unexpected increase of the sale of new homes [when compared with the economists’ expectations].

    As you say yourself:”The economists didn’t figure on prices dropping as much”. The fact that this drop in prices resulted in an increase in sales (supply and demand) was not surprising at all…

    Delia

    P.S. The phrasing *is* a bit cumbersome — I suppose you could read it the other way also, but why do that and insult the writer when there is a perfectly logical explanation to that statement? D.