March 21, 2012

While Housing Starts Languish, AP’s Kravitz Trumpets Increase in Permits as Evidence of Builder Optimism

You’ve got to admire the determination of Derek Kravitz at the Associated Press, aka the Administration’s Press, to find lemonade among the lemons known as the monthly new-home construction statistics from the Census Bureau. Why, he was even able to find a guy who said that “housing permits-not the starts” are more relevant in gauging the health of the market. Did it ever occur to these guys that builders might be piling up permits in the hope that economic conditions will change for the better for real once it’s clear that the country will have new leadership (which could conceivably happen even before the November general elections)?

Here are the first seven paragraphs from Kravitz’s report, followed by a fuller rundown of the relevant stats (bolds are mine):

U.S. builders are betting that the housing market is finally on the path back to health.

They requested 5 percent more permits in February to build single-family homes and apartments in the coming months. That increased the annual rate to a seasonally adjusted 717,000 permits, the Commerce Department said Tuesday.

While that’s still half the rate considered healthy by most economists, it’s the highest since October 2008.

“This report is one of the more encouraging new construction reports we have seen in the last four years,” said Patrick Newport, an economist with IHS Global Insight.

Economists cautioned that construction levels remain depressed and the housing market has a long way to go before it is back to full health.

In an indication of that challenge, the government said builders broke ground on slightly fewer homes in February. The seasonally adjusted rate of 698,000 housing starts fell from January’s revised level of 706,000, which was the highest since October 2008.

“The key numbers in this report are the housing permits-not the starts,” said Newport. “The permits are better measured than starts, are less influenced by weather and are forward looking.”

Hmm. October 2008 was the last full month the nation didn’t know for sure that Barack Obama would be the next President of the United States. Just sayin’.

Mr. Newport somehow didn’t incorporate the fact that the weather was relatively good in February, so seasonally adjusted starts shouldn’t have fallen at all. In fact as seen here (scroll to bottom), actual single-family starts, at a pathetic 31,500, were lower than January. Multi-unit starts, at 16,600 (48,100 found here minus the 31,500 just noted), made up an unusually high — at least before the Obama era — one-third of all starts.

Here’s more:

  • Another note on permits — Actual single-family permits of 34,600 were lower than February 2010, and made up less than two-thirds of the total of 52,300 permits issued. Before 2009
  • Completions — Completions of 38,900 for all housing types and single-family completions of 28,600 were both the lowest on record for any February in the forty-plus years such records have been kept, and the third-lowest in any single month.
  • Under construction (actuals) — Total units: 430,200. Single-family: 229,800, the third-lowest on record. Grasp the impact: over 46% of units currently under construction are multi-unit dwellings.

This is hardly a set of conditions indicating that housing “on the path back to health” — unless you’re in the fever swamp known as the Administration’s Press.

Cross-posted at


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