Housing Starts Rebound?

Housing starts rebounded last month, according to the headlines. However, you need to look at the data to put this "rebound" in context.

The housing starts rebound is that little blue uptick at the end of the chart. This is not the beginning of the upturn, nor even the end of the downturn. This is a little sawtooth in the downward trend. Expect it to continue, given the large overhang of inventory I've discussed in the past.

Comments

[jarber:]

You are exactly spot on. Calling this a "rebound" is beyond foolish.

2008 May 18 11:51 AM

[Tom Lindmark:]

This is the second guy this week that didn't bother to look at the components of the housing starts number. You'd think an economist would be a little more rigorous. It was a surge in apartment building that pushed up the number. Single family housing starts actually declined. Here's a link that will get you to the true story- blog.metro-real-estate...

2008 May 18 12:13 PM

[Urbane Gori...:]

Is Mr. Lindmark then suggesting we should buy 'multi-family' and eschew 'single-family homes'? The author did not differentiate. He states simply that the much noted uptick does not exist.

Thx jegan

2008 May 18 12:45 PM

[Tom Lindmark:]

While multi-family might not be a bad buy depending upon location, my point was not to advocate its purchase rather to note that the author and another yesterday had failed to dig into the numbers to determine why there was an uptick at all. Had he done so he wouldn't have had to make an anecdotal comment about a sawtooth in a downward trend and could have presented solid evidence as to why the uptick was misleading.

As for wakeup's comment about good news. Here's some. Buyers were camping out in Phoenix this week at a new home development in Phoenix this week. Just like the the good old days. We are going to come out of this, probably earlier than we expect. Here's the link for that story-blog.metro-real-estate...

2008 May 18 01:52 PM

[mlambert890:]

Well everyone here is really saying the same thing so no need to nitpick. The reality is that the downturn hasnt nearly stopped yet, but at some point it obviously will. Real estate is still a finite commodity and still a tangible asset that people will always want. We allowed a speculative bubble to feed itself like a cancer and grow out of control. Artificial wealth creating more artificial wealth as bad mortgage paper was bundled into bad CDO instruments.

I think anyone who has any level of real economic understanding recognizes that we are going to be deflating for a good long while in housing. I expect new home starts to trend down for at least a few more years and the median US home price to continue to drop until we have given up roughly 35% of the record highs of the past couple of years.

2008 May 18 05:38 PM