Covering 2013's Final New-Home Sales Report, AP 'Forgets' to Tell Readers That Market Is at Only 61% of Healthy Level
Usually, when the Associated Press covers the Census Bureau's monthly new-home sales releases, its reporters will tell readers that a "healthy" market should generate about 700,000 sales per year (examples here and here). Though I believe that figure is insufficiently ambitious, given that pre-bubble annual sales averaged 776,000 from 1993-2000, it apparently has somewhat wide acceptance.
Of all the times to mention that benchmark, the bureau's final report for 2013 released this morning would be it. But AP's Martin Crutsinger failed to do so, possibly because astute readers would have noted that the year's actual sales of 428,000 units show that the industry, despite years of a media-hyped "housing recovery" which is supposedly leading the economy out of the wilderness (cough, cough), is still operating at a miserable 61 percent of capacity (428K divided by 700K). Excerpts from Crutsinger's report follow the jump (bolds are mine):
US SALES OF NEW HOMES DROP 7 PERCENT IN DECEMBER
U.S. sales of new homes fell in December for a second consecutive month but even with the pause at the end of the year, sales for all of 2013 climbed to the highest level in five years.
Sales of new homes dropped 7 percent in December to a seasonally adjusted annual rate of 414,000, the Commerce Department reported Monday. In November, sales had fallen 3.9 percent.
For the whole year, sales were up 16.4 percent to 428,000, the highest level since 2008.
It marked the second year that sales have risen after six consecutive annual declines as the housing industry was rocked by the collapse of a housing bubble. Sales of new homes peaked at 1.28 million in 2005. Analysts expect further sales gains in 2014.
Some might argue that the 1.28 million figure provides sufficient context, but I would disagree. That number represents the bubble's peak, and thus is clearly seen as an artificial high. There's no indication of what "normal" is supposed to be.
In case readers didn't get the Crutsinger's point about artificiality, he brought it up again in later paragraphs:
... Sales of previously occupied homes rebounded 1 percent in December helping that market to sales for all of 2013 of 5.09 million. That was the best performance since 2006 when sales totaled 6.48 million. However, the sales gains in both 2005 and 2006 represented an unsustainable housing boom which collapsed, helping drag the economy into a deep recession which triggered a painful retrenchment in housing.
Analysts expect housing will keep recovering in 2014 but they don't look for the sales gains to be as large as they were in 2013.
So the new single-family home industry might get to 65 percent or so of what is recognized as a healthy industry capacity. Whoop-dee do.
What we're really seeing is a new, depressing normal driven by a half-decade of sustained economic malaise and industry-hampering housing policies being dressed up by the establishment media as something with which we're supposed to be impressed.
We're not, guys. Nor should we be.
Cross-posted at BizzyBlog.com.