NEW YORK (AP) - Here's a scary thought about the housing market: Things may be far worse than what's already being revealed by the troubling government and industry statistics.
At issue is what goes into sales price data and what does not. When those numbers are crunched, many of the incentives that sellers are using to lure buyers - including cash rebates - aren't being included.
That suggests prices may be falling faster in many markets than is now being reported. The same goes for how the mortgage-application indexes don't account for the implosion of lenders. That could have the effect of masking a slowdown in demand, which is why the housing market could be in for rough sailing much longer than most anyone anticipates.
There certainly has been plenty of bad news, but it might not even be giving a full picture of how difficult things really are.
For instance, the Commerce Department reported last week that the median sales price of new homes fell 0.9 percent in May from a year ago, after tumbling 10.9 percent in April.
But those numbers don't include the thousands of dollars in lavish incentives like plasma televisions, pool installation and closing costs that sellers are increasingly using to woo buyers. That means a home selling for $600,000 gets reported for that price even though all those extras technically are reducing the net sale price.
Sales incentives at Lennar Corp., one of the nation's biggest builders, averaged $43,700 a home in its fiscal second quarter, up from $24,700 in the same quarter last year. And it isn't just builders piling on the incentives - it's spilling over to the existing-home and foreclosure market, too.
"In effect, they are reducing the new sales price but that is not showing up anywhere in the actual sales data," said Peter Schiff, who runs the investment firm Euro Pacific Capital Inc. in Darien, Conn.