Wednesday, July 18, 2012

Housing starts up over 40% in past 18 months


This chart provides good evidence that housing starts have turned up in a big way. Since Dec. '10 (which I've marked with a green line), starts are up 41%, or at a 25.7% annualized rate. Of course, the level of starts is still miserably low (they fluctuated between 1 and 2 million from 1968 until the current recession), but the gain in the past year or so has been signficiant. The recovery in residential construction is upon us, and it is for real.

12 comments:

brodero said...

Ratio of Housing Starts to Nonfarm payrolls is .579%,,,highest level
since Sept 2008,,,but way off its 30 year average of 1.20%.

Anonymous said...

Lee Adler is confirming what I said earlier about withholding tax receipts

Now, wouldn't this be a market stunner?

"If the withholding tax growth rate is applied to the SA payrolls data for July 2011, (1.0183 x 131.407 million) the SA number for July would be 133.812 million. That would be an increase of over 720,000 from the current June figure."

Unknown said...
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Unknown said...

Right the housing recovery is real...sure.
So please explain this to me:

"The shadow inventory of homes – those in foreclosure plus those 90 days late on mortgage payments – is on the rise again, a further indication that the supply side has not yet healed. Accoring to RealtyTrac, foreclosure starts jumped 6 percent on a year ago basis in the second quarter, the first year-over-year increase since 2009. There are roughly 4.16 million homes that could begin to flow to market.

Once one takes the number of homeowners 30- to 90-days late on their mortgage payments and includes the likely default of those that have negative equity on their homes, there is a strong possibility more than 6.5 million additional foreclosures will enter the pipeline. The addition of homes that banks may be holding back suggests a much larger number. Laurie Goodman of Amherst Securities Group has testified before Congress that it could be as high as between 8 and 10 million."

Scott - my academic training in economics is limited but this just seems as basic supply/demand logic to me. It is clear banks have forcibly prevented this excess supply of home from hitting the market. There is no denying this supply is there.
The action we are seeing right now in increased sales and slightly rising prices is merely a function of shadow inventory being stocked away, and that there is once again no true clearing price. Isnt this just a short term manipulated imbalance with the supply and demand curves.

This is going to drag on us for years (maybe decades).

Squire said...

Perhaps new housing will do better than existing housing. New housing is better for the economy anyway.

Like I said, the headline jobs number is being suppressed so that it can be caught up with a vengeance in September and October to benefit Obama in the election.

L.A. said...

I'm tired of hearing about shadow inventory. Record low apartment vacancies, rising rent cost outpacing homeownership, record low mortgage rates, improving economy (albeit slowly), all are coming together to yield increased demand for homes in an under supplied market.

Do banks have more losses forthcoming from this shadow inventory? Indeed. This is simple market dynamics though. Do you want to sell your stock at the market bottom? Of course not you hold when you see a price bottom in anticipation of increasing prices.

Key for housing is that no longer is it now a drag on gdp. It is at least flat, and maybe growing. So it will soon make the long awaited positive contribution to gdp.

Throw in pent up demand, record low prices into the above equation and I'm sure many investors will be lining up to buy up these deeply discounted shadow homes.

The housing bottom has arrived.

Benjamin Cole said...

Housing starts, however are still at recession levels. Deep recession levels.

The problem is weak demand.

Benjamin Cole said...

BTW, according to the freshwater Cleveland Fed, inflationary expectations just hit another record low.

These expectations are miles below that of the Reagan Days, when Reaganauts hounded Volcker for being "too tight."

Also, what is the connection between gold prices and inflationary expectations? A complete jumble? Global gold prices and the US inflation rate have any connection to each there? How?

Orthodoxy, encrusted enough, becomes dogma.

Benjamin Cole said...

http://www.clevelandfed.org/research/data/inflation_expectations/

sorry, the link to the Cleleland Fed...

McKibbinUSA said...

On a five-year basis, housing starts are just another piece of evidence that the Main Street depression is very real and horrific for ordinary people who own homes...

McKibbinUSA said...

The status quo is easy to justify until one acknowledges that the US is in depression -- more at:

http://wjmc.blogspot.com/2012/07/invisible-depression-in-us.html

If the US does not act in some way to reverse the fortunes of its citizenry, the chances of an unexpected and catastrophic civil "blow up" increase -- said another way, the current invisible depression in the US is our nation's greatest threat since the civil rights movement that spawned Medicare and expanded Social Security -- only the naive will overlook today's economic realities as something "normal" -- those without means should be under cover, and those with means should take precautions -- civil unrest tends not to discriminate based on one's riches...

Unknown said...
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