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Wednesday, February 20, 2013

Despite The Chirpy Commentary

The new housing report for January is out.

Single family remains below the 09/10 levels. Multi-family continues at higher levels. Multi-family authorized-but-not-started are way up YoY (44.8%) so that should continue. Single-family authorized-but-not-started are up also YoY (12.8%) although the pace is not brilliant. The 90% confidence interval for multi-family is 20.5%. For single-family it is 10.8%. So not brilliant. We can however be quite confident that we are finally increasing. 

Starts for single-family are up 20% YoY with a 90% confidence interval of 11.2%. Starts for 5 or more units are up 34.7% YoY with a 90% confidence interval of 42.4%, so we are just not sure about this. 

Under construction numbers are the most important for the current economy, and those show very solid YoY gains. Single-family are up 17.8% YoY with a 4.4% 90% confidence interval, and multi-family (5 or more units) are up 38.2% with a 90% confidence interval of 7.4%. 

The drop off from the 09/10 period has something to do with the slackness in GDP evident in 2011. In 2012 other factors took over - the economy turned in a really weak performance despite genuine improvements in residential construction.

I haven't been discussing these figures much since Q1 2012, but that was because statistical significance was hard to find. These levels had to come up before the figures began to mean anything. Now they have. 

Single-family completions are way up YoY (+43.4%), with a confidence interval of 20.8%. Multi-family completions show no statistically valid trend - they are reported up 8.6% with a confidence interval of 31.4%. However you don't worry about that because the under construction figure is very strong there.

The weakest figures by far are shown in the NE, but that may be because of capacity constraints. Contractors are probably tied up fixing storm damage. Permits rose sharply from December in that region, although they were still below the confidence interval. So maybe they didn't. But completions picked way up MoM. The storm-damage fixing is going to FUBAR new construction in the region. 

Comments:
The numbers sound impressive, but when put in (charted) perspective we're going nowhere fast.

The "new normal" -- spending trillions we don't have simply to tread water.
 
Well, at least we are not handing out purchase tax credits so that infants can buy their first home before they are one.

That early hump in building really comes from misguided attempts to pretend it all wasn't happening, and the worst of it is that those people were suckered into buying and are now sitting on capital losses. That was just a dirty trick.
 
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