Tuesday, April 17, 2012

Housing continues its recovery

March Housing Starts came in below expectations by a sizable amount, but I don't think that's a reason to think that the nascent housing recovery is dead. To begin with, March starts were still 37% higher than their 2009 all-time low, and still 10% above a year ago. Second, starts are a volatile series, and seasonal factors can contribute to that volatility in the winter months when starts are typically low.

But this chart of Building Permits helps clear things up. March Permits were well above expectations, and as the chart above shows, they are on a tear—up 46% from their 2009 low, and up 30% from a year ago. Seasonal factors have probably distorted this number as well, but between the two, the picture is still one of recovery. After all, permits come before starts.

Permits and starts track each other tightly over time, and you can see that in the last chart, with starts in orange and permits in white.

In my view, there is no doubt that the housing market continues to recover, even though activity is still at very low levels from an historical perspective.

1 comment:

Benjamin Cole said...

Well, If this is a housing recovery....echoes of the old Soviet-style news coverage, if this is touted as a recovery.

The USA needs to get its fiscal house into order, and the Fed needs to print currency until the walls are blistering in the printing plants.

Japan went into a real estate bust---20 years ago. Property prices have continued to go down ever since, constantly undermining banks and borrowers. The nation has been in deflation--the nirvana predicted by gold nuts and currency fetishists have turned in purgatory instead.

We are lining up to do a Japan here, or a Japan-lite.

BTW, Milton Friedman unabashedly (and John Taylor and Alan Meltzer) told Japan to print a lot more money, and none whimpered about debasing the currency, exchange rates or the value of the yen to gold etc. Money is a medium of exchange, not a store of value--Japan has tried the yen as a store of value plan, and it is an epic failure.

We need a ton of sustained QE here, while wiping out the federal deficit, and whole agencies, such as HUD, USDA, Labor, Homeland Security, the VA (privatize and give vouchers to vets) and about two-thirds of Defense.

The United States of Nippon--coming your way soon.