Although it would be unfair to characterize Derek Kravitz's report at the Associated Press this morning on the Census Bureau's new home sales report as anything but bleak, the AP reporter missed what should have been the most obvious stat: The 19,000 new homes actually sold nationwide in January 2011 (i.e., not seasonally adjusted, real number) is the lowest for any single month on record in the 48 years the Bureau has been reporting this information.
Kravitz also demonstrated that he has picked up a couple of bad habits the AP's Martin Crutsinger displayed when reporting on news home sales during several previous months. First, he set the bar which would represent a legitimate industry recovery artificially low. Second, he gave readers the impression that the current housing market is better than it was a "nearly half-century" ago, which of course it isn't.
Here are several paragraphs from Kravitz's creation:
New-home sales in January drop 12.6 pct
Sales of new homes fell significantly in January, a dismal sign after the worst year for that sector in nearly a half-century. [1]
New-home sales dropped to a seasonally adjusted rate of 284,000 homes last month, the Commerce Department said Thursday. That's down from 325,000 in December and less than half the 600,000-a-year pace that economists view as healthy. [2]
Bad winter weather likely hampered some sales, although the industry has been struggling since the housing bubble burst in 2006.
Last year was the fifth consecutive year that new-home sales have declined after hitting record highs during the housing boom. Buyers purchased 322,000 new homes last year, the fewest annual total on records going back 47 years. Economists say it could take years before sales return to a healthy pace.
... Mortgage applications are now near their lowest levels in 15 years.
Notes:
- [1] -- A reasonable reader would take "the worst year for that sector in nearly a half-century" to mean that some year during the early 1960s was worse. It's not even close, even before adjusting for population growth. Census Bureau reporting began in 1963, when 560,000 units were sold. Total sales during the next two years were slightly higher. Given that economic growth was positive during every year from 1960-1965, it's inconceivable that sales fell below the 322,000 annual total seen in 2010 during the three earliest years of the decade. I demonstrated late last year that 2010 was really the worst year in the new home market since World War II.
- [2] -- Kravitz's assertion that a pace of 600,000 new homes sold per year would represent a "healthy pace" flies in the face of history. Only two years since 1983 (1990 and 1991) have come in with lower totals -- and the nation's population was about 19% lower than it is today. The recovery bar is really an annual pace of 750,000 - 800,000.
Finally, as would be expected, Kravitz fails to broach the possibility that Obama administration policies and programs or government-sponsored entities like Fannie Mae and Freddie Mac have had anything to do with why the homebuilding industry remains in the pits. That would seem to be a more important factor than January's bad weather in parts of the country.
It will be interesting to see how cheerleaders like Julie Schmit at USA Today, who composed a comic column on how "Optimism for home sales adds up" in late December, react to January 2011's all time single-month record low. A reasonable guess: Silence.
Cross-posted at BizzyBlog.com.
