The Census Bureau reported earlier today that seasonally adjusted housing starts and homebuilding permits fell by 14.4 percent and 5.6 percent, respectively, in August. The detail wasn't any better, as the two categories within each statistic — single-family and multiple-dwelling homes — also fell.
You can tell that the news wasn't seen as good at the Associated Press, because Josh Boak's related dispatch had already fallen to number nine in the list of the wire service's top ten business stories by 3:30 p.m. The headline and content at Boak's report tried to convince readers that apartment-building volatility was almost entirely to blame, and that things are all right in single-family homebuilding. As will be seen, nothing could be further from the truth.
Here are first six paragraphs from Boak's report (bolds and numbered tags are mine):
VOLATILE APARTMENT SECTOR REDUCES US HOME BUILDING
(Note: That is, BOTH sectors reduced homebuilding. — Ed.)U.S. home construction plunged in August, led by steep decline in the volatile apartment category. But single-family house construction, a larger and more stable portion of the market, fell only modestly. [1]
Construction fell 14.4 percent in August to a seasonally adjusted annual rate of 956,000 homes, the Commerce Department said Thursday. This reverses the sharp gains in July when the rate of new construction rose to 1.12 million homes, the highest annual rate since 2007.
Last month's decrease primarily came from builders starting fewer apartment complexes, which plummeted 31.5 percent compared to July. Apartments have propelled much of the growth in residential construction over the past year, but the pace has been volatile from month to month. Apartment starts surged 51 percent in July.
In August, the building of single-family houses fell 2.4 percent. [2]
Applications for building permits, a sign of future activity, dipped 5.6 percent to an annual rate of 998,000. [3]
Apartment construction has surged 19.2 percent in the past 12 months. Meanwhile, single-family starts have risen just 4.2 percent. The shift among builders to increased apartment building is a sign that a rising share of Americans will be renters, rather than homeowners. [4]
Notes:
[1] — Note that the story's first sentence contradicts its headline, which would make readers believe that only apartments were responsible for the decline. Additionally, AP continues to make the mistake of assuming that "housing starts" and "construction" are the same thing, which they obviously aren't.
[2] — Boak is trying to make this decline appear inconsequential, so it's time for some historical context:
The above chart shows, six years into the alleged housing recovery, that combine housing starts during June, July and August of this year are still lower than any pre-housing bubble year since 1982, the depths of that era's recession, when the country's population was roughly 30 percent lower.
There is no homebuilding momentum.
[3] — Annualized and seasonally adjusted single-family permits in August came in lower than in August 2013 — more evidence of no momentum.
[4] — In other words, the new normal, despite six years of alleged recovery, is reduced home ownership. It's enough to make you wonder if the administration is genuinely interested in a housing recovery. People who live in rental units can be a bit easier to control.
Cross-posted at BizzyBlog.com.
