After reading Derek Kravitz's final report of the day at 4:45 p.m. on the housing market at the Associated Press, aka the Administration's Press, I just had to check the other wires to see if they were sipping from the same housing-market-in-recovery koolaid.
The answer is no. At Reuters, Jason Lange's 3:22 p.m. dispatch reported that "Output at U.S. factories slipped in March and builders started construction on fewer homes, offering cautionary signals for an economy that appeared to be gaining traction." At Bloomberg, Timothy R. Homan wrote: "While warmer weather may have spurred home construction at the beginning of 2012, a competing supply of cheap existing properties may be steering potential buyers away from purchasing a new home. That means home construction may not help boost the economy in 2012." Both of these assessments make Kravitz's take on housing, which included omitting very negative data on housing starts, seem that much more bizarre (my comments in italics follow each paragraph):
It's been a long time since the market for new homes has looked this good.
The number of single-family homes under construction, a seasonally adjusted 241,000 in March, is barely higher than the all-time low of 235,000 set in October 2011, and didn't get that low in 42 years of recordkeeping until July of last year.
Rising rents and a healthier job market are inspiring more people to consider buying.
Builders are responding to rising rents by building more multi-unit dwellings which are usually rental properties, not by building more single-family homes. Later in the report, Kravitz notes, as he has in three other reports since Sunday, that "Employers have added an average of 212,000 a month from January through March." Trouble is (seasonally adjusted), employers in this "healthier job market" only added 120,000 of those jobs in March. The trend is stable at best if April turns around, and deteriorating at worst if it doesn't.
Builders are responding to the demand by laying plans for more homes this year than at any other point in past 3 1/2 years.
"Building permits" don't represent active "building." Housing starts do (at least its initial phase), and they dropped significantly in March, by so much that they were, as Bloomberg noted, "less than the lowest estimate of economists surveyed by Bloomberg and the slowest since October." Kravitz went from giving them equal time with permits in his opening report today, to downplaying their importance 90 minutes later, to not mentioning them at all in his final report.
And banks are helping both by approving more loans.
Kravitz clearly hasn't learned what I've learned, which is that in many part of the country banks will not lend for spec home-building, even in parts of the country that are doing well. So it's getting to the point where the only way a builder will start building a home is to have a buyer already lined up.
All that points to a better year for the housing market, though a full recovery could take several years.
Kravitz's case is weak, and as noted, his optimism is not shared at Reuters or Bloomberg -- or by yours truly.
A more complete analysis of today's housing data release is at my home blog. You'll learn a lot more there than you will in any of the reports Derek Kravitz submitted today -- especially his final one, which puts his one-day performance on a par with Anne D'Innocenzio's Orwellian whitewash several weeks ago of March's Conference Board consumer confidence report (which went from “falls” to “dips slightly” to “roughly flat” to a “rosy outlook” in the course of a single business day)
Cross-posted at BizzyBlog.com.
