The Census Bureau reported today that new-home sales in November came in at a seasonally adjusted annual rate of 490,000. That was a 4.3 percent increase over October, but it only occurred because October was revised steeply downward by 25,000 to 470,000; August and September were also revised slightly downward. Actual sales were 34,000, the highest November figure during the Obama era but lower than all but three other years since 1970, all during recessions.
It has become painfully clear during the past seven years that the homebuilding industry won't genuinely recover as long as the current reckless Obama fiscal policy and its oppressive, red tape-infused regulatory apparatus are in place. So what can an economics writer at the Associated Press, aka the Administration's Press, do to make a "recovery" look at least plausible? Josh Boak's answer: Lower the bar.
In otherwise tolerable coverage, here's how Boak attempted to define a "new normal" for the second straight month:
The residential construction sector is still recovering from the housing bust and the Great Recession, which officially ended more than six years ago. New-home sales remain below their 52-year historic average of 655,200.
So if 655,000 or so new homes are sold in some far-off year (this year is on track to come in at 490,000 - 495,000), voila! The industry will have finally "recovered."
Uh, no.
If you're going to go back over a half-century to implicitly define "normal" or "healthy," you're going to have to adjust for changes in either population or the number of households.
Here is what happens after adjusting for population:
Points:
- Once adjusted for population, we see that this year's new-home sales (using a mid-point estimate of 493,000) will be lower than every year on record from 1963-2007 — by miles.
- The excuse that it requires many years to pull out of a housing slump is hogwash. The worst population-adjusted figure from 1963-2007 occurred in 1982. The result for 1983 came in 285,000 units, or a full 50 percent, higher. (Meanwhile, today's business press is telling us that we should somehow be impressed with this year's estimated improvement, at a far lower base level, of roughly 12 percent.) There is no reason the 1983 performance could not have been replicated in at most two years following the 2008-2009 recession. Instead, The Pelosi-Obama-Reid "stimulus" and the administration's reckless deficit spending deepened the housing contraction through the second half of 2009 after the recession ended, all of 2010, and all of 2011. Those policies, along with the Dodd-Frank financial regulations regime, have kept the attempted housing comeback far more muted than it should have been.
- The beige-highlighted box on 1991 represents the year Democratic presidential candidate Bill Clinton characterized as part of "the worst economic record in the past 50 years." As far as the housing industry was concerned, it certainly wasn't.
- The yellow-highlighted area genuinely represents the worst alleged "recovery" since world War II.
- The population-adjusted average of new-home sales during the past 52 years has been 848,000, almost 30 percent higher than the 655,200 "benchmark" Boak is trying to establish. One could argue that the 848K benchmark is a bit inflated because of demographic changes and the influence of the Democratic Party-driven policies which caused the previous decade's housing bubble. But at the very least, the genuine recovery benchmark should be 775,000 to 800,000.
Housing should have led the nation out of the recession. Instead, the industry has vastly underperformed and continues to vastly underperform what was seen after other recessions. Redefining a "new normal" won't change that reality.
Cross-posted at BizzyBlog.com.
