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Statement about the Possible Impact on New Home Prices and Characteristics
Effective with the January 2005 data release, the Survey of Construction implemented a new sample of building permit offices from which sampled houses are selected. The sample of permit offices was redesigned to reflect the location of building permit activity in the past few years, replacing the previous sample selected in 1985. The selection of the approximately 900 permit offices in the new sample was designed to optimize the precision of the housing starts estimates. No attempt was made to select offices representing geographic areas with similar housing prices and characteristics as the old sample. As a result, data users should use caution when analyzing year over year changes in housing prices and characteristics between 2004 and 2005. It may be possible, for example, that many jurisdictions in the 1985 sample are more built up now, remaining land may be more expensive, remaining lots may be smaller, etc. These jurisdictions may have been replaced in the new sample with more outlying areas that are now actively issuing building permits. In these locations land may be more abundant, lot sizes might be larger, and sales prices possibly lower. It is important to note that estimates from the old and new samples are both statistically correct. The actual values that we are trying to estimate fall within intervals that can be calculated from the sample data with known probabilities. For example, when we publish an estimate with a relative standard error (RSE) of 5%, there is a 90% chance that the true value is within "8% (statistically defined as 1.6 times the RSE) of the estimate. |
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