Even though the number of new home starts plunged by almost 10% in December, the massive headline on Marketwatch was BEST YEAR SINCE 2007. WOW!!!! We must really be experiencing a strong market driven housing recovery.
But wait. Let’s look at a long-term chart and assess how awesome this housing recovery has been. Considering that 2009 marked the lowest level of starts in the last 45 years, we’ve certainly recovered from that dreadful level. Of course, the current level of starts is 33% below the level during the 2001 recession and about equal to the level during the 1991 and 1981 recessions. It is also 55% below the most recent peak in 2006 and 50% below levels from the 1970’s.
Consider that the current level has been achieved during a time when mortgage rates have been the lowest in this 45 year period. Also, consider that mortgage rates are going higher. Also, consider that young first time buyers are almost non-existent due to student loan debt and no jobs.
As you can also see from the chart, the starts have been driven by the construction of apartments, not single family homes. This has been driven by Wall Street and Bernanke’s 0% interest rates. But, now apartment vacancies are on the rise. They have overbuilt and the wheel will come off this fraud too.
The only time that single family housing starts have been lower over the last 45 years was at the absolute bottom of a recession. Think about that. The housing market is currently peaking where previously it had bottomed. And the MSM has the balls to declare this fantastic news.
Starts Plunge 9.8% As Housing Permits Miss By Most In 7 Months
Submitted by Tyler Durden on 01/17/2014 08:41 -0500
Last month’s record-breaking surge in housing starts has rapidly reversed and fell 9.8% MoM – the biggest drop since April 2013. Despite a plethora of revisions, single unit housing starts tumbled to 610k – the lowest since July. However, permits were dismal (which is what we should be caring about if we are looking ahead at how the ‘recovery’ will play out). Building Permits dropped 3% MoM, far more than expected, missing by the largest gap since June. This was the 3rd biggest monthly drop in total starts since Lehman. However, year-over-year, the data is abysmal – Starts rose at the slowest pace since Aug 2011, and Permits at the slowest pace since April 2011.
Permits missed notably…
With Total Housing Starts dropping by 108K, or the 3rd most since Lehman.
Non-Seasonally adjusted Starts tumbled notably more than in previous years…
And single-family starts – with the benefit of a health seasonal adjustment – are back near pre-Lehman levels… but worryingly… NSA single family of 42.4K is the lowest since January’s 39.4K
Finally, permits Seasonally adjusted vs Non-seasonally adjusted: