What the Business Press Won't Tell Us: Single-Family Home Sales Are Still Below Recession Levels
The Associated Press, Bloomberg and Reuters all eagerly told readers today that the seasonally adjusted annualized level of single-family home sales in September of 389,000 was the highest in 2-1/2 years and really, really good news for the housing market, the economy as a whole, or both. What they all "somehow" failed to mention was the fact that sales are still far below where they were during the 12-month recession in 2008 and 2009 (defining "recession" properly), when the market was screeching to a halt after overbuilding driven by subprime lending frauds by design Fannie Mae and Freddie Mac.
The numbers reported by the Census Bureau since January of 2008, first expressed at seasonally adjusted annual rates, then as raw number of homes sold, follow the jump.
Here they are:
The figures for September 2012 on both scales are over 10% below those seen in September 2008. With the exception of two months in 2010 when a new homebuyers' tax credit was about to expire, the single-family housing market continued to deteriorate even after the recession officially ended in June 2009. The decline continued through all of 2010, while the market basically stayed at its unprecedentedly low level during all of 2011.
Year-to-date actual sales this year of 286,000 are still lower than the comparable figure from 2009 by 5,000 units. The average monthly rate seen this year of 32,000 works out to less than half the annual rate of 750,000 the Associated Press has repeatedly cited as the level representing a healthy market. This month, the AP's Christopher Rugaber "somehow" forgot to include that metric, which is odd until you remember that it's the month before the presidential election, and that we're dealing with the organization which has earned the nickname the Administration's Press.
Here are the headlines and descriptions of today's report found at the three major wire services:
- AP (Christopher Rugaber): Headline -- "US NEW-HOME SALES RISE TO HIGHEST IN 2 1/2 YEARS"; Description -- "further evidence of a sustained housing recovery that could help lift the lackluster economy."
- Bloomberg (Alex Kowalski): Headline -- "Home Sales Rising to Two-Year High Spur U.S. Growth"; Description -- "the industry whose decline was at the heart of the recession is bouncing back."
- Reuters (Lucia Mutikani): Headline -- "New home sales jump to near 2-1/2 year high in September"; Description -- "further evidence the housing market recovery is gaining steam."
Reuters actually was a bit unfair in its comparison to the past, noting that "new home sales are just over a quarter of their peak in July 2005." Unfortunately, we now know that this peak was driven by loosened lending standards and fraudulent packaging of hundreds of billions of dollars of securitized loans at Fannie Mae and Freddie Mac (perhaps as much as $2 trillion if one includes the loans the two entities kept for themselves).
The better benchmark is the last half of the 1980s. On a population-adjusted basis, monthly and annual sales during 2012 are far less than half of what they were during that period -- proof that talk of a "bounce-back" is premature at best, and deceptive at worst.
Cross-posted at BizzyBlog.com.