August 26, 2014

Fantasy at AP: Housing Has Had a ‘Steady Rebound’ Since the Recession Ended

Someone must have slipped the wrong data to the Associated Press’s Josh Boak yesterday before he composed his dispatch on the Census Bureau’s latest report on new home sales.

Boak got the current month’s news right, though likely by accident (like almost everyone else in the business press, he relies on seasonally adjusted figures, and rarely goes to the unadjusted data), telling readers that “Fewer Americans bought new homes in July, evidence that the housing sector is struggling to gain traction more than five years into the economic recovery.” That’s fine, but his characterization of the longer-term history of home sales was woefully incorrect:

… the steady rebound in construction coming out of the Great Recession has stalled. Sales lost much of their momentum beginning last October, derailed by modest wage growth, a bump in mortgage rates and many builders focusing more on rental apartments and high-end homes for wealthier buyers.

Census Bureau tables (herehere and here) make a mockery of that excerpted passage:


(Red boxes) The AP and other news outlets have consistently (and erroneously) equated “construction” with housing starts. Safely assuming that Boak continued in that tradition, it’s clear from the first table that it took over two years before “construction” even began to “rebound”; seasonally adjusted starts were exactly the same in August 2011 as they were in June 2009, the month the “Great Recession” officially ended. Meanwhile, seasonally adjusted sales in August 2011 sales were almost one-third lower than in June 2009.

(Green box) Sales didn’t lose their “momentum,” if it’s even fair to describe current depressed levels as having any of it, in July and the third quarter of 2013 — not in October, as Boak asserted.

(Blue box) Seasonally adjusted annual sales actually increased in October. That’s the opposite of “lost … momentum.”

(Purple boxes) Unadjusted monthly sales in July were exactly the same as in June 2013. Seasonally adjusted annual sales (getting back to the second table) really didn’t get back to where they were at the recession’s end until well into 2013.

The current “stall” in sales is especially infuriating because after five years of massive deficits and Federal Reserve quantiative easing, things are barely better than they were after the recession ended. For the reason Boak hinted at but understated — what he calls “modest wage growth” has really involved “real declines in household income” — it’s not unreasonable to believe that the “stall” will continue.

Cross-posted at


1 Comment

  1. I still think the South is the only part of the housing market that is showing any signs of improvement. Construction in the Northeast and Midwest is basically maintaining, the West is showing some increase in activity but not in completions, and the South is showing increases in activity AND completions. (YoY July numbers). In fact, South monthly completions are up to 15.5% of the number under construction. In addition, South New Home sales are up 35% July 2013 vs July 2014 (all other areas are flat). New for sale in the South is up ~10%. In addition to these Census numbers, the Realtor numbers show the South to be the only region with increased Existing sold numbers (though it is barely an increase, the rest show a decrease). My bet is that the existing inventory in the South is also down.
    This is definitely the case in my area, two people that just moved here said they looked at houses that were for sale but ended up renting and have signed for new construction due to not being able to find anything that met their needs (available existing homes were really old and “strange”).

    Comment by Scott — August 26, 2014 @ 11:53 am

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