Just another misleading report from thge Obama Administration – have you seen this headline ……
May housing construction jumps by 17.2 percent – I urge you to read the article before it is pulled and dispapears …. The Obama Administration is only interested in “floating” inaccurate reports to foster a false belief in a “phantom economic recovery” – The reports are later “pulled” without explanation or more troubling, correction by the Main Street Media. Here is what the most recent article states,
“Construction of new homes jumped in May by the largest amount in three months, an encouraging sign that the nation’s deep housing recession was beginning to bottom out. The Commerce Department said Tuesday that construction of new homes and apartments jumped 17.2 percent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction fell in April to a record low of 454,000 units.”
Can you believe this – 4 falsehoods in one paragraph.
Here are the real stats from an independent source ……. reporting on the same Commerce Department numbers.
“New housing starts dropped significantly in April, 2009 down 54.2 percent from April, 2008. There were only 458,000 homes started in the month. The Commerce Department also is reporting new housing starts dropped to levels not seen since 1959. New building permits, an indicator of future building, were also down. New building permits, which give a sense of future home construction, dropped 3.3 percent to 494,000 units, the lowest since records started in January 1960, from 511,000 units in March. That was well below analysts’ estimates of 530,000 units. Compared to the same period a year-ago, building permits plunged 50.2 percent. http://www.therealestatebloggers.com/2009/05/19/housing-starts-down-542-percent-for-april-2009/
What does this tell US? After an especially dismal March 2008, the experts estimated that anuual housing starts would approach 530,000 in 2009. That “estimate” has now been increased to 532,000 new home starts for all of 2009, a projected increase of 2000 homes, not the 32,000 homes reported in the 1st article. (The 1st article incorrectly reports that 2009 housing starts had been estimated at 500,00). For those that are mathmatically challanged, like those in the Obama Administration and the fawning main street media, a 2000 home increase from 530,000 to 532,000 is not a 17.2% increase but is, instead, an increase of just less than 1%. Just like election polls, a 1% change is within the margin of error and means, from a statistical point of view, there has been no meaningful change in the estimated housing starts between April and May of 2009, unless of course, one fudges the numbers.
The 1st article also contains what might be considered a “lie of omission” when it states that the whopping 17.2% increase (that is actually a 1% increase) is the largest increase in the last 3 months. What a whopper. If, in fact there was an increase in housing starts between April and May, that increase would have been the first such increase since the Obama Administation took office.
Now don’t be foooled by the fact that housing construction increases as the seasons progress from winter to spring to summer. That is not an event related to the economy, that is an event related to the weather. Builders start more homes in the warm weather than in the dead of winter. All of the experts and anyone who has had a home built, knows this. The number to watch is the “total projected” housing starts for the year. That number now stands at 532,000 from the prior number of 530,000. At year end you then go back an examine exactly how many homes were built and sold in 2009. As the saying goes, the proof is in the pudding.
You may wonder what this amazing, but statistically insignificant, increase of 2000 means. Well consider this headline from last May, May of 2008.
Housing Starts Hit 17-Year Low in May June 17, 2008 7:38 AM CST
In what now appears to be a desperate attempt to reduce available supply by home builders, the Commerce Department reported Tuesday morning that new starts on residential construction fell to their lowest levels in 17 years during May. Privately-owned housing starts registered a seasonally-adjusted annual rate of just 975,000, the lowest level since March 1991 and 3.3 percent below a revised 1.008 million pace recorded for April. http://www.housingwire.com/2008/06/17/housing-starts-hit-17-year-low-in-may/
Hmmm …. now lets see, last year represented a 17 year low, however, the “estimateed new housing starts” in May 2008 were 975,000, nearly twice as many as the 532,000 reported for May 2009. Doesn’t that mean we need to increase 2009 housing starts by an additional 443,000, just to tie last year’s 17 year low.
Touting an “estimated” increase of 2000 housing starts in 2009 would be like the players of last years winless Detroit Lions running off the field proclaiming “I’m going to Disneyland” after a single victory (the slogan is one usually reserved for the Superbowl Champs). If you set your expectations low enough, missing a 17 year low of 975,000 by 433,000 is considered good news
The extremely anemic “growth” between April and May 2009 occurred despite the highly touted $8,000 tax credit for those who cannot save a down payment on their own …. or “Sub-Prime II”, the return of the beast that wrecked the mortgage market in the 1st place.
You should note that the May 2009 “projection” does not take into account the recent and rapid escalation in mortgage interest rates which has occurred as the Government tries to give billions away in mortgage money that it does not have. As the Government tries to “borrow” the money as fast at it “gives it away” we will see an ever increasing level of interests rates and ultimately, inflation. Higher interest rates and inflation will retard future housing starts. http://www.oregonlive.com/business/index.ssf/2009/06/mortgage_rates_rise_again.html
The latest housing numbers are just another example of “the goodnews” being that the “bad news” isn’t any worse …..