February 19, 2014

AP Goes to the Weather Again to Explain Away Weak Homebuilding Data

The January 2014 New Residential Construction report released by the Census Bureau this morning was very weak. Building permits fell from December by a seasonally adjusted 5.4% (-1.3% for single-family homes). Housing starts fell by 16.0% (-15.9% single-family. The annualized single-family starts figure of 573,000 was the lowest in 17 months.

Naturally, Martin Crutsinger at the Associated Press, aka the Administration’s Press, blamed it on the weather, and promised that prosperity is coming soon in his very first paragraph. Too bad some of the data he cited clearly refutes the “blame the weather” meme. Almost miraculously, his story’s headline is clean (bolds are mine):


U.S. home construction fell in January for a second month but the weakness in both months reflected severe winter weather in many parts of the country. The expectation is that housing will deliver another year of solid gains, helped by an improving economy.

Builders started work at a seasonally adjusted annual rate of 880,000, down 16 percent from December, the Commerce Department reported Wednesday. In December, construction had fallen 4.8 percent. The declines in both months were blamed largely on the weather.

Applications for building permits fell in January for a third month, dropping 5.4 percent to a rate of 937,000.

… By region of the country, construction shot up 61.9 percent in the Northeast after two months of declines but was down in every other region of the country. Construction fell 67.7 percent in the Midwest to a record low of 50,000 units at an annual rate. The records go back to 1960. That big decline likely reflected the impact of severe weather in the Midwest in January. Construction was down 12.5 percent in the South and 17.4 percent in the West.

The massive improvement in the Northeast came in spite of awful January weather. Weather was so bad roughly two weeks before the February 2 Super Bowl in New Jersey that there were open worries about it continuing and wreaking havoc.

Meanwhile, weather in the West wasn’t extraordinarily bad, yet it showed a double-digit decline in starts.

As has been the case for years with AP, the story’s headline and Crutsinger’s content assumed that “housing starts” equals “housing construction.” Of course, it doesn’t, but the wire service remains incorrigible. In this case, its erroneous use of the term “construction” as a synonym for “starts” arguably makes things look worse than they really are, as underlying real construction activity may not have fallen so steeply.

A look at not seasonally adjusted single-family starts data shows that starts during the past couple of months have been running at about half the level seen in the late-1990s before the industry began overheating:


The AP will never tell readers that the industry is still several years of “solid gains” away from even resembling what it used to be.

Cross-posted at NewsBusters.org.


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