Don't Buy This Housing Report

Together, our weary eyes have seen a lot of bad business reporting. But the work we saw on Tuesday's housing data might take the poisonous cake.

Don't be misled into buying housing stocks like Toll Brothers(TOL Quote), KB Home(KBH Quote), Pulte Homes(PHM Quote) or Home Depot(HD Quote), which showed signs of life on the strength of these epically dumb headlines. Your portfolio deserves better.

Here is a representative sample, a headline atop an Associated Press article: "New home sales rise unexpectedly in April."

Long awaited great news! A housing surprise on the upside! We haven't seen one of those since pretty much forever. The April new-home report, comparing new-home sales to March, is called "upbeat" in the subheadline and the lead trumpets the number as the first increase in six months and, for good measure -- in case you missed the point -- termed it "unexpected."

They Just Don't Get Home Sales!

Unexpected is right. Undeserved too. Take even a passing glance at the joint news release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development and you'll see just how undeserved it is.

Guess what? The very first paragraph will turn you from unexpectedly upbeat back into a Gloomy Gus. Why? Well for the very simple reason that you'll be told that the March figures were revised downward. Got that? April was up because March was down. April earned those excited headlines about being better than expected, in large part because March was worse than first thought.

And were there mentions in this journalistic effort that these April numbers could, like the March ones, be revised down too? You didn't really ask that, did you? Such guarded and legitimate caution in the service of you, the savvy investor, would step on those excited headlines.