The Housing Data Story the Bubblemedia Refuses to Tell

By John Galt
July 20, 2011

Yesterday the Census Bureau updated the Residential Construction data with their monthly report with data from June 2011 and the media fawned and screamed “oh wow, it’s improved! We’re saved!”

That nonsense of course can be invalidated by bouncing a bowling ball off of a concrete floor and the shock is that “wow, it bounces” unless of course it hits someone’s foot in which case the bounce is not that high but the screams are pronounced. Thus the housing data once again demonstrates that the law of physics can not be invalidated. The news from the National Association of Realtors this morning was bad, but the worst aspect is at least receiving some headline attention, especially with Diana Olick one of the few good reporters at CNBC, where the cancellation rate was a stunning 16% plus in the month of June.

The other data released yesterday was nothing to cheer about either if one follows the advice given by these pages to keep things in a historical perspective. First up, here is the permit data for housing in June 2011 and a dirty little secret behind it:

(CLICK ON GRAPH TO ENLARGE)

buildingjgflapermitsjun11

The area I have circled reflects the housing crash and crisis we are still buried in. But to make matters worse, add in the facts behind the data and when you separate the single family permits from the data the improvements reflected become glaring:

(CLICK ON GRAPH TO ENLARGE)

singlejgflafamilypermitsjun11

Single family home permits are still mired in all time lows which means the majority of the increase in permits (as well as starts) was in the arena of multi-family or apartment construction. The portion of the chart I drew a line through in blue labelled “NORMAL TIMES” is a conservative estimate of where the chart and permits should be if we did not have a housing bubble and crash. Thus the data continues to indicate a housing depression despite the cheerleaders screaming that you should buy home builder stocks and the housing sector is improving dramatically.

The housing starts data does not indicate much improvement either when taken into realistic perspective:

(CLICK ON GRAPH TO ENLARGE)

housingjgflastartsjun11

My fine readers, your eyes are not deceiving you. The data is not even close to the numbers or data from 1959.

So much for that.

The numbers for units under construction also reflect the boom in apartment or multi-family construction:

(CLICK ON GRAPH TO ENLARGE)

underjgflaconstructionjun11

Yup, still at all time historic lows. But hey, that bowling ball didn’t hurt anyone’s foot when it hit did it?

Units completed also reflect the silliness of the financial and mainstream media’s reporting yesterday as it is still in the range of historic lows:

(CLICK ON GRAPH TO ENLARGE)

housingjgflacompletionsjun11

The good news is that the data reflects a seasonal bounce.

The bad news is that this does not indicate an economic recovery is under way and in fact as the foreclosure process begins to re-accelerate, the fallacy of building a new home will be realized by potential buyers who face 30 years of debt as by the time the moving van backs up the driveway, they are upside down by as much as 10-15% before the first box is unloaded or the first payment is made in many, many markets.

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