Housing starts: Up, way down, or both?

Signs of life in the new home construction numbers? Investors seem to think so. But maybe they're "innumerate"


Andrew Leonard
July 17, 2009 6:42PM (UTC)

Single family housing starts rose for the fourth straight month in June, the latest sign of (barely perceptible) life in the residential real estate market. But all these month-to-month increases tend to obscure just how pitiful the overall market still is. Housing starts "unexpectedly" rose 3.6 percent in June, compared to May.

But compared to June 2008, starts were down 46 percent.

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One could also ask, given the current inventory overhang, whether we need any new homes being built at all. As Peter Boockvar notes at The Big Picture, "Single family starts rose in both the South and West, the two areas of the country that least need new starts."

Meanwhile, the proprietor of the Big Picture, Barry Ritholtz, dismisses virtually all business coverage of the new housing starts as "innumerate," because they don't take into account margin-of- error considerations: "plus 3.6 percent with a margin of error of 11.3 percent = don't know."

That may be true, but these numbers, valid or not, still move markets.

From the WSJ:

An upbeat U.S. housing starts report pulled the plug on a rally in Treasuries Friday morning.

Selling returned to the government debt market after the report showed an unexpected rise in U.S. housing starts while building permits surged, adding to evidence that the troubled housing market is starting to heal.

By Ritholtz's reasoning, that means Treasury investors are innumerate as well!


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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