Derek Kravitz at the Associated Press, aka the Administration’s Press, must have doubled down on the energy drinks over the weekend. A Sunday morning report (HT to a NewsBusters tipster) telling readers that signs are “pointing to a long-awaited recovery” in the housing market went on, and on, and on, and on for over 1,350 words.
The factors the AP pair cited were primarily these: “Hiring has strengthened,” “Loans remain cheap,” “Homes are more affordable,” and “Americans are more confident.” They should have known that their first point has become questionable with March’s mediocre jobs report and the recent spike in weekly initial unemployment claims to 380,000 (which so happens to be above his colleague Christopher Rugaber’s already too-high benchmark for job-market improvement of 375,000), and that the last point should read: “Americans are less un-confident.” In terms of the new-home market, where much if not most of the GDP-generating action is (at least in normal times), yesterday’s builder sentiment index foreshadowed serious problems with their premise, while today’s “unexpected” data from the Census Bureau basically finished it off.
The sentiment index dropped from 28 to 25, compared to expectations of 29. The headline at Kravitz’s coverage yesterday (“US homebuilder outlook dips below 4-year high”) obscured the fact that the index dropped back to where it was in January. One would also think that a lot of builders who would have been index participants when it dropped into single digits in late 2008 and early 2009 have left the business, with the less pessimistic ones remaining.
Today’s New Residential Construction report from the Census Bureau, analyzed here at my home blog, was a big disappointment. Distilled into four bullet points and sticking with seasonally adjusted numbers, it told us that:
- While permits are up, they are skewing towards multi-family dwellings.
- Total housing starts fell, and came in 8% below January.
- The virtually identical number of single-family starts in February (463,000) and March (462,000) were almost 9% below the virtually identical numbers for December (505,000) and January (509,000).
- Completions and the number of units under construction came in near their historic lows.
Reuters and Bloomberg, employing the now infamous U-word (“unexpectedly”) recognized that today’s data stunk, especially the key data point, namely housing starts:
Bloomberg (“U.S. Housing Starts Unexpectedly Drop to Five-Month Low”)
Builders began work on fewer homes than forecast in March, signaling a sustained industry recovery will take time to get underway.
Housing starts dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. The slump was led by the volatile multifamily category, which at the same time showed a jump in permits, a proxy for future construction.
Reuters (“March housing starts fall, new permits surge”) –
Groundbreaking on homes fell unexpectedly in March, but permits for future construction rose to their highest level in 3 1/2 years, Commerce Department data showed on Tuesday.
Housing starts slipped 5.8 percent to a seasonally adjusted annual rate of 654,000 units, the government said. February’s starts were revised down to a 694,000-unit pace from a previously reported 698,000 unit rate.
Economists polled by Reuters had forecast housing starts little changed at a 705,000-unit rate.
March’s decline in housing starts was the biggest percentage drop since April of last year, although most of the fall was in the volatile multi-unit category, which declined 16.9 percent.
Starts for single-family homes eased 0.2 percent.
And brightening the report’s message on the economy, new permits for home construction surged.
The problem with the “surge” in permits, something which I expect the establishment press not to investigate, is that builders may be stockpiling permits in advance of economic improvement they may believe is many months away, for reasons which should be obvious.
Anyway, Reuters and Bloomberg gave the housing starts element of the report an appropriate level of attention. So did the Associated Press — at first. Wait til you see what the AP and Kravitz did after that to dress up today’s pathetic numbers. That post will come later today.
Cross-posted at NewsBusters.org.