At first blush, it might seem hard to imagine how one can contend that a press report describing an industry sector as operating "at depressed levels" and at volumes that are one-half of what "economists consider to be healthy" isn't telling the whole truth. But that's exactly how I would describe Tuesday's writeup by the Associated Press's Derek Kravitz after July's Census Bureau release on housing starts, building permits, homes under construction, and completions.
The problem is, as I separately noted earlier today, that of the sixteen key metrics the Bureau reported, eleven of them were record lows, either for any July on record, or any individual month on record. The other five were either the second-worst or third worst Julys on record. This isn't a depressed market; it's a despondent one. Kravitz only disclosed one of those eleven records, and in a misleading manner.
Here are several paragraphs from Kravitz's crummy creation, including a somewhat deceptive headline (bolds and numbered tags are mine):
July home building slips after early-summer bump [1]
Builders broke ground on fewer single-family houses in July, leaving home construction at depressed levels.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 604,000 homes last month, a 1.5 percent decrease from June. That's half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market. [2]
Single-family homes, which represent 70 percent of home construction, fell 5 percent. Apartment building rose more than 6 percent.
Building permits, a gauge of future construction, declined 3.2 percent. Jill Brown, vice president of economics at Credit Suisse, said that decline suggests "very little forward momentum." [3]
The number of homes under construction is the fewest in 40 years. Just 413,000 homes are under construction, after accounting for seasonal factors. [4] A decade ago, roughly 1.6 million homes were built. [5]
... New-home sales fell in June to a seasonally adjusted pace of 312,000 homes per year. That's less than half the 700,000 per year that economists consider to be healthy. [6]
... U.S. homebuilders are just as pessimistic about the depressed housing market as they were two years ago.
The National Association of Home Builders said Monday that its survey of industry sentiment was unchanged at 15 this month. The index has been below 20 for all but one month during the past two years.
Notes follow.
[1] -- The "bump" is a figment of the AP headline writer's imagination. July's seasonally adjusted annual figures for total starts and single-family starts were both lower than January, which was in turn high than the four following months in both instances. Seasonally adjusted single-family permits have been basically flat, while multi-unit permits during the past three months have increased quite a bit, but from a very small base. Besides, we're working with numbers that are so absurdly low that any increases would have to be well into six figures before anyone could credibly call them a "bump."
[2] -- I've been meaning to look at this oft-cited figure for a while. Annual Census Bureau info on starts going back to 1959 indicates that it's extremely low. Even if one excludes all activity from 1999 on because it was overheated by artificially low rates, subprime lending, and exotic mortgage products, 26 of the 40 preceding years saw over 1.2 million permits issued; 15 of them were over 1.4 million. The average of all years from 1959-1998 -- excluding the seven recession-containing years of 1960, 1970, 1974, 1981, 1982, 1990, and 1991 -- was 1.57 million, when the nation's population was 10% to 40% lower than it is today. Paraphrasing Roy Scheider in "Jaws," who after seeing the size of the shark he was up against, said, "We're going to have to get a bigger boat" -- AP, you're going to have to get a bigger benchmark.
[3] -- Ms. Brown is an optimist badly in need of a pair of glasses if she sees any "forward momentum."
[4] -- No, Derek, if you choose to only go by the government's published records, it's the lowest in at least 40 years. Records go back to 1970; every monthly figure that year was at least twice as high as every number recorded in 2011 thus far. As I noted late last year, we are without a doubt in the worst homebuilding market since the end of World War II -- and by a large margin.
[5] -- It's odd and potentially confusing why Kravitz would have included this sentence about homes "built" (the Census Bureau's term is "completed") after one about homes under construction.
[6] -- The AP has moved this number up a bit in recent months. I wonder why? It was 600,000 in this report by Kravitz on February 24. When it appeared, "somebody" suggested that 750,000-800,000 might be a better number. Hmm -- Maybe this NewsBusting is accomplishing something after all.
As I wrote earlier today about the significance of the virtually uninterrupted housing meltdown of the past three years:
The July housing stats, and the three years of data which precede it, demonstrate how completely absurd the idea is that we ever truly emerged from the recession into something resembling anything decent. President Obama can crow all he wants about what he allegedly accomplished, but it doesn’t change the evidence, which emphatically says otherwise.
It would be nice if Kravitz had compared President Obama's claims to housing's reality. But before that happens, we're going to have to have see AP reporters consistently break the ice and actually mention Obama's name in negative economic reports other than GDP and employment. Good luck with that.
Cross-posted at BizzyBlog.com.
