Housing Starts Fall 46%

Yet another set of odd and misleading coverage on Housing Starts.

BUILDING PERMITS: Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 563,000. This is 8.7% (±3.0%) above (revised) May rate, but is 52.0% (±3.6%) below the June 2008.

HOUSING STARTS: Privately-owned housing starts in June were at a seasonally adjusted annual rate of 582,000. This is 3.6% (±11.3%)* above the revised May estimate but is 46.0% (±4.3%) below the June 2008.

What can we tell from this data?

Nothing about monthly change in Starts (data points less than the margin of error are statistically insignificant); We can say that permits were up month to month, although how much of that is seasonal is hard to decipher.

The year-over-year data is much clearer: New Starts down 46%, Permits down 52%.

Not exactly green shoot materials here — but given the enormous inventory overhang, less new building is better. And since year-over-year compares the same month, seasonality is not a factor.

Incidentally, much of the media reportage on this was simply innumerate — the numerical equivalent of illiteracy. Not just a little wrong, but totally, embarrassingly incorrect.

WSJ:“Housing starts increased 3.6% to a seasonally adjusted 582,000 annual rate compared to the prior month, the Commerce Department said Friday.”

Bloomberg:Housing starts in the U.S. unexpectedly rose in June as construction of single-family dwellings jumped by the most since 2004, signaling the market is stabilizing. The 3.6 percent increase brought starts to an annual rate of 582,000.

Marketwatch: Housing starts rose 3.6% to a seasonally adjusted annual rate of 582,000, the highest figure November.

Reuters:   New housing starts and permits jumped more than expected in June, propelled by a rise in single-family homes, a government report showed on Friday. Housing starts climbed 3.6 percent to seasonally adjusted annual rate of 582,000 units, from May’s upwardly revised 562,000 units, the Commerce Department said.

No, that is not what they said at all –  plus 3.6% with a margin of error of 11.3% = YOU DON”T KNOW.

I know, this is a pet peeve of mine — but still, it makes you wonder if these people can count to 21 unless they are naked.


Note the number of monthly improvements which did not prevent big annual drops over the past 3 years:


graph courtesy of Barron’s Econoday

Originally published at The Big Picture and reproduced here with the author’s permission.

5 Responses to "Housing Starts Fall 46%"

  1. Paracelsus   July 17, 2009 at 10:59 am

    Thank you! Again. The US media universe appears are bought and sold by the sell-side analysts. It is the same as with the earnings by the banks. 99% of the people in this country actually believe what the news media tell them.

  2. Renee Guth   July 18, 2009 at 8:36 pm

    Is the media intentionally misleading the public? I’m a regular citizen and I was asking the questions that you answered above.

  3. RKR   July 24, 2009 at 5:09 am

    Bravo!I have been sensitive to use of yearly-change charts in the NY Times Economy section under bold headlines of a topic and subtle subheads of (yearly change): this makes people think that an upturn in the still-negative yearly-change chart is a positive instead of a reduced-negative.Please do charts comparing the absolute number of starts, cumulative job losses, and similar statistics with the misleading charts showing yearly change data. I would be very interested in this, and you should be able to get some press with some very revealing graphics…..

  4. Michael Shores   July 24, 2009 at 7:12 am

    Well done. Along the same lines, the media typically reports only the U3 unemployment number. What actually seems to be more illuminating is the trend comparison between U3 and U6.

  5. Bob F   July 25, 2009 at 10:45 am

    When the country is in bubble-mode, realists are dismissed as “doomsayers” and “pessimists”. The cheerleading mainstream media promotes the bubble and walks the somnambulant lemmings into the inevitable buzz saw.Now, when we are somewhere in the midst of cycles 3 and 4 (down, and perhaps forming a bottom, but probably not yet), the sociopaths keep stealing (aided by the Keystone Cops in D.C.) and cheerleaders say anything to instill “confidence”, in order to set the next bear trap. The cheerleaders use their pulpit to claim that they are “optimists” who have “faith in free markets and the American people”. Contrarily, realists are made to seem like Nazis or Nihilists.Well, unfortunately you can’t fix stupid, and fools will fall prey to the posers again, and again, and again.Those of us who are realistic are tagged as Cassandras. The masses will hope that things return to “normal”, and will be disappointed when they discover that hope is not a strategy, and we have entered the age of “The New Normal”.But first, the Oligarchs will play the cards they are holding and will steal every penny they can before being physically restrained from doing so. Those of us who try to alert the masses will find ourselves mostly frustrated.”Unsolicited advice is usually unappreciated, and often resented.” That said, we can try to help those who are willing to be helped, and we can position ourselves to benefit financially by not getting caught up in The Madness of Crowds.