And now some Truth about Yesterday’s Housing Data

By John Galt
December 21, 2011 – 09:50 ET

Because it is poor form to report bad economic news before Christmas and blasphemy to acknowledge data which gives the impression that our Imperious Leader (sorry, Dear Leader was taken) is impotent and incompetent regarding economic matters, the housing data reported yesterday was trumpeted as an indication of a possible bottom or start of the bottoming process in the housing market. In fact some blogs like Business Insider performed their usual duty of posting blog entries from both point of views but providing prominence to the bullish viewpoint because some of the editors there apparently are still suffering from Lipsonobamabuttockitis, a disease known to infest the New York City area and create blind love and obedience to promoting propaganda for the Imperious Leader.

The problem of course is that “truth” is always based on a statistical perspective and the data yesterday is no different. While the seasonally adjusted data indicates that happy days could be here again, the facts do not bear out this myth. The non-seasonally adjusted numbers indicate a slump with starts, permits, and units under construction still at historic lows. I do not use the term “historic” lightly as I am talking about numbers which are consistently below all data reported since 1959 with little indication of a long term up trend emerging.

First the much ballyhooed starts number where some reporters engaged in a random act of honesty and point out that the data was skewed by an increase in multi-family housing units, aka, apartments, beginning construction. The charts validate this when you first look at the total starts versus single family starts:

(click to enlarge charts)


The data does not lie.

Starts in total only surpassed levels seen in January 1982 during that recession and just short of the January 1992 levels of 52.5 thousand units. The “uptick” noted by analysts and cheerleaders was offset by the reality that there was a drop of 1,300 units from October to November in total. Single family housing starts continue at a fifty year low and declined 3,900 month over month.

The permit story was not much better. Total permits issued were down by only 100 month over month but continue to flounder at levels some 60-90,000 below normal periods of economic growth:


Again, much like the starts, permits continue to drift just above or below the 50,000 mark nationwide which is little over 1,000 per state, a number which will not encourage nor advance plans for hiring in the construction sector. Permits for multi-family units were the winner with an increase of 2,800 month over month and 3,200 year over year.

Single family permits are still indicating a construction depression and lack of demand despite media reports:


Permits issued for single family homes might be up by 600 year over year, the drop of 2,800 permits month over month indicate a horrid spring housing season on the horizon. Add in the fact that those numbers are at 75% lower levels from earlier in the decade and inventory increased again, odds are this market will not recover in 2012 or 2013 despite prognostications by the Bubblevision guests.

Finally, units under construction are at historic lows and the chart speaks for itself:


To provide some perspective, here is the one number which outlines how severe the housing numbers are:

At 236,900 units under construction, that is the fewest number of single family homes under construction in history since the Census Bureau started tracking the data in 1969.



Not really, it’s just Bushnomics with a liberal twist.

To read the entire report from the Census Bureau, click on the link below (Excel Format):

New Residential Construction Report for November 2011

%d bloggers like this: