Reuters has this headline/story:

New U.S. housing starts unexpectedly rebounded in February, surging 22.2 percent, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market. The Commerce Department said the jump in housing starts to a seasonally adjusted annual rate of 583,000 units was the biggest percentage rise since January 1990. That was also the first increase since April last year, when they advanced by 1.6 percent. January’s housing starts were revised to a rate of 477,000, the department said.

Um, no.

There is a grammar problem with the headline: I suspect they meant “Housing Starts Rebounded from January Lows.”  Any improvement form the record low levels last month — the worst since since 1960 — does not mean a US turnaround has begun.

That may be an unfortunate words choice on the part of Reiters. It is not “U.S. Housing – Starts Rebound” — its more likely “U.S. Housing Starts – Rebound.”

On to the data: If we look at the breakdown by unit types, the gains in starts were mainly in multi-family units; single family starts were little changed. And, February was still down nearly 50% from prior year. The past 4 months rank as the worst housing start figures since the data was collected. The past 2 quarters have 6 of the 10 worst seasonally adjusted figures.

This is reflecting the secular shift in trend to renting from buying. Home ownership rate is receding form the 68% level a few years ago — artificially inflated via ultra low rates / abdication of lending standards — back towards to a normalized 64% level

Peter Boockvar suggests today’s data “is a reflection of where construction money is going.” And, the decline in permits though in this sector means that the building pace in February is unsustainable.


U.S. housing starts rebound
Lucia Mutikani,
Reuters, Mar 17, 2009 9:18am EDT

Category: Data Analysis, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

45 Responses to “Bad Headline of the Day: U.S. Housing Starts Rebound”

  1. leftback says:

    “it’s a mustard seed, Ritholtz, what’s the matter with you?” (Kudlow)

    Obviously a meaningless statistical blip in a noisy series.

  2. Scott F says:

    hahah thats very funny –

  3. Paul Jones says:

    Soaring to an all-time low…

  4. Mannwich says:

    Green shit, I mean chutes, or is it shoots?

  5. HCF says:

    The other crappy part about the headline is that the increase is month to month! Year over year, housing starts are down 47%! Yeah, mustard seeds baby!


  6. whskyjack says:

    I noticed the rental part, It is the way the industry works. I used to do framing and the builder we subbed for always said “don’t worry, if nobody is buying houses then I can always build apartments. People need to live somewhere.” He is right and they like new and shiny over old and rundown.


  7. why the hell is anyone building new homes at all

    i wish some of the homebuilders would go under or merge…too much capacity for building

  8. ottovbvs says:

    BR: this is becoming faintly self parodic….it is up 22% or 106,000 units over the previous month…..maybe not the first swallow of spring but heading in the right direction surely……

  9. ottovbvs says:

    TheReformedBroker Says:

    March 17th, 2009 at 12:24 pm
    why the hell is anyone building new homes at all

    …….Because we don’t have one market but hundreds of them

  10. RW says:

    >>It is not “U.S. Housing – Starts Rebound” — its more likely “U.S. Housing Starts – Rebound.”<<

    Yup, Reuters appears to have a syntax problem. Bet they think a Panda is defined as a “Large black-and-white bear-like mammal, native to China. Eats, shoots and leaves.’”

    This is a noisy series with a strong seasonal component: Best tracked YoY

  11. scorpio says:

    Summers out of his lair, trying to save his job and his boss’ waning confidence in him.

  12. ottovbvs says:

    scorpio Says:

    March 17th, 2009 at 12:34 pm
    Summers out of his lair, trying to save his job and his boss’ waning confidence in him.

    …..You have such a disappointment coming to you early next year

  13. OTTO

    hundreds of markets in dire need of McMansions built by the Toll Bros

    its a joke

  14. formerlawyer says:

    Interestingly the “normalized” home ownership percentage is postulated as being at 64%. Canada which has not suffered the same kind of mortgage meltdown has the following ownership statistics.

    1971 1976 1981 1986 1991 1996 2001 2006

    Canada 60.3 61.8 62.1 62.1 62.6 63.6 65.8 68.4


    Does this mean the U.S. has to go back to the 1996 ownership levels as well?

  15. Mannwich says:

    And they’re still building condos here in Minneapolis. Many empty condo buildings all around as far as I can tell. Still building some rather large McMansion developments in some burbs. Insane.

  16. Renting in Mass says:

    Happy days are here again!

  17. karen says:

    There is a new housing project going in behind me… it’ll consist of 30 units, a pool and a clubhouse. The winning bidder may have been Lennar; i’m not certain. But, the project is for the military…

  18. ottovbvs says:

    TheReformedBroker Says:
    March 17th, 2009 at 12:46 pm

    …….OK have it your own way the US is one big homogenous market composed entirely of McMansions built by Toll Bros.

  19. call me ahab says:

    I am not sure of the actual statistics but common sense would indicate that housing starts inch up in February every year.

  20. ottovbvs says:

    Mannwich Says:

    March 17th, 2009 at 1:00 pm

    …..I picked up on your comment this morning which is taken in the spirit it was given….I see they took down my little primer on corporate byelaws and the virtual absolute power they hand over to CEO’s……since I know you’re interested in politics have you noticed the little stunt the Democrats are pulling to pass tax legislation to void the AIG bonuses…’s all for the birds of course but I’ll be watching the Republicans wriggle on this one.

  21. rktbrkr says:

    Maybe people with homesites getting bargains from builders, buying their straw hats in a snowstorm

  22. rktbrkr says:

    Buy a home, get a greencard – it’s a great solution to an intractable problem!
    The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president’s $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.

    The federal bailout forces taxpayers to subsidize overextended homeowners who bet on ever-rising house prices and used their abodes as ATMs, and it doesn’t get to the basic problem — the huge inventory of excess houses. We estimate that 2.4 million houses over and above normal working inventories are left over from the 1996-2005 housing bubble. That’s a lot, considering the long-term average annual construction of 1.5 million single- and multi-family units.

    Excess inventory is the mortal enemy of house prices, which have already fallen 27% since the peak in early 2006. We predict another 14% drop through the end of 2010 if nothing is done to eliminate the surplus.
    [Immigrants Can Help Fix the Housing Bubble] Chad Crowe

    Doing nothing to eliminate the excess inventory might well push the recession through 2010 and into a depression. Declining home values, for example, are eliminating the home equity that has funded oversized consumer spending for years.

    As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.

    A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. — if they buy houses of minimal values (not shacks). They wouldn’t need to live in those houses, but in order to remove the unit from the total housing market, they couldn’t rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% — but where many foreigners like to live.

    Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.

    These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.

    There is a high correlation between education and incomes, and in today’s uncertain economic climate, many wealthy foreigners desire U.S. resident status just as a number in Hong Kong secured residences in Singapore and Canada before the British handover to China in 1997. They rapidly became over a quarter of Vancouver’s population, and brought in billions of dollars to buy houses and make other investments.

    We could benefit from such an influx. Merrill Lynch estimates that in 2007 there were 10.1 million individuals in the world, 7.1 million outside the U.S., with at least $1 million in financial assets that totaled $29 trillion. If new immigrants bought the 2.4 million excess houses at today’s $184,000 median price with funds from abroad, they would bring untold billions. The immigrants would also buy consumer goods, pay taxes, and start many new businesses.

    The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

    America’s relatively open immigration policy makes this country better off than many other developed lands whose governments also must fund the pensions and health care for growing numbers of retirees. Yet there’s still a huge need for more productive and skilled people, both current residents and immigrants, who will produce enough goods and services to provide for their own needs and for those in retirement. Otherwise, entitlement spending eventually will touch off intergenerational warfare.

    Granting permanent resident status to foreigners who buy houses in this country will curtail a primary driver of the deepening recession and financial crises — excess house inventories and the resulting collapse of prices. Since the people who will buy these houses will tend to have money, education, skills and entrepreneurial talents, they will be substantial assets to America in both the short and long runs.

    Mr. LeFrak is chairman and CEO of LeFrak Organization, a real estate builder and developer. Mr. Shilling, an economic consultant and investment adviser, is president of A. Gary Shilling & Co.

    Please add your comments to the Opinion Journal forum.

  23. ottovbvs says:

    rktbrkr Says:

    March 17th, 2009 at 1:25 pm
    Maybe people with homesites getting bargains from builders, buying their straw hats in a snowstorm

    …….I think this is very conceivable…..About a year ago I looked at buying a home in the Harborplace area of Baltimore…..It was a distress purchase of about sixty units by a local developer from someone like Lennar… They cut the prices by about 30%…..I looked at the situ about two weeks ago almost all sold and they’d actually increased the prices slightly on the remaining unsold units

  24. carolina says:

    I am a residential real estate developer in Nashville, TN (at least I think that is what I still do as a profession). I was listening to CNBC as they announced the housing stats. The analysis indicates that the uptick was due to multi-family (apartment) construction starts. With the construction start numbers being so low, it is easy for them to be skewed. It seems like they have been skewed by developers building apartments as more individuals are forced to rent. So from my perspective and experience as a residential developer, nothing has changed in the single family housing market. Things are still very negative in housing with buyers on the sidelines in fear and banks not lending to anyone in the home building or development business! And this is the reality in a market like Nashville that isn’t awash in housing inventory like FL, AZ and NV.

  25. Mannwich says:

    A bit off-topic but the wife and I are looking into replacing all of our windows in our home, which I believe are the originals from 1921 or at least they’re 50 years old or more anyway. Deals abound everywhere right now with contractors, so I think we’re going to negotiate hard and do it. There’s also a $1,500 tax credit for doing this. We’ll also be doing our part to stimulate the economy!

    I really think that more people will just stay in their homes, hunker down, and do little home improvement projects like this over the next few years.

  26. carolina says:

    Mannwich – I agree. The custom home builder friends I know have lots of renovation work and that has become their focus to keep the lights on. No new speculative home building is going. The only new home construction that is getting financed is a custom owner occupied deal, and the home owner has to come up with a with a huge deposit to satisfy the lender.

  27. Todd says:


    You left off another down the road benefit to this. Paying for the boomer Social Security benefit needs as they retire.

  28. ottovbvs says:

    Douglas Watts Says:
    March 17th, 2009 at 2:11 pm

    …….I’m sure you’re right about single family homes I’ve been looking at the stats on these for forty years on and off and never seen it go this low…..that said there is some modest activity in my town in the NE where homes existing sales in 08 were down about 18% over 07…….On balance the dearth of new building is good for awhile to run out existing inventory…..when the recovery comes I think we’re going to see quite robust markets in most places but with the usual suspects in the tank for years a bit like California was from 91 to 97.

  29. ottovbvs says:

    carolina Says:

    March 17th, 2009 at 1:46 pm

    …..oops the Doug Watts comment was aimed at carolina

  30. jmcmanus says:

    NAHB HMI index, sales, and S.F. starts will decouple–national builders from local and regional pick-up truck home builders–as consolidation and capacity correction occur. Still, our theory is high vol. builders will correct on price faster and set industry bottom sooner because of scale and geography…. and will finally establish the V in LTV for the rest of real estate assets. One month sequential is not a trend but one month that’s not more swan dive is noteworthy.

    Also, we feel your takeaway thought: a revert-to-mean homeownership v. renters is based on wrong assumption. It’s not a result of correcting what went wrong with policy, business, and boneheaded or scamming home buyers. The shift in percentage rentals will come as result of echo-boom demographics.

  31. gordon says:

    I work as a consultant for Lennar, Inland Empire. They are moving on some lots again, putting smaller floor plans on old projects, a new name, this always happens in recession. The lots are finished, initial buyers need to be pacified, they’re yelling about dirt next door. Street improvements are already in too, the bank already loaned the money.

  32. ottovbvs says:

    jmcmanus Says:
    March 17th, 2009 at 4:11 pm

    …..I picked up on your link and basically agree with your take…’s fundamentally a positive sign….. we’re not far from the bottom…’s all depends on inventory in individual markets and there are hundreds of individual markets…..prices have fallen but outside disaster zones they are really back to 2003/4 levels which are not catastrophic…..I have a lot of connections in the construction equip business and they tell me they’re sensing a bottom in housing outside certain markets….interesting take on the demographically driven rental market

  33. The Woodsman says:

    Things are great in housing. Read this about my neighbor to the south.

  34. willid3 says:

    maybe its just trying to hype home builders equities?

  35. Mike in Nola says:

    I noticed the strangely bouyant headline on But, I suppose everything there is supposed to be bouyant.

    This is just going to add to the downward pressure on the prices of single family homes, whether the new units are single family or multi-family. More alternatives to buying an overpriced used home.

    Hew in Houston, there is a glut of new apartment buildings coming online. I expect (hope) rents will drop. There is one building about a mile away that had been adverstised as no-money-down condos a year or two ago. It’s been sitting empty for at least six months, while it’s sister building across the street look sparsely populated. This is on top of some pretty nice town houses and fair sized single family homes becoming rentals. Not sure if the last are owned by investors or the owners gave up on selling as we almost did until God sent us some nuns to buy ours.

  36. Mike in Nola says:

    sorry for the typos. Spent the day trying to get a webserver to do something it didn’t want to and am pretty tired.

  37. ottovbvs says:

    The Woodsman Says:

    March 17th, 2009 at 4:45 pm
    Things are great in housing.

    ……Did anyone say it was great in housing other than you?….A measured appraisal is being given by jmcmanus……you can take it or leave it.

  38. leftback says:

    Another initial claims number coming on Thursday, to bring us all back to reality. I expect a little correction in the Spring Rally to begin tomorrow afternoon, if not before, in anticipation of another big number.

  39. SeanFX says:

    It’s all multi-family these days, huh. I live in LA, and the funny thing is that I’ve seen signs ‘condos for sale’ for a year now and yet they are building new ones right next door in the most expensive areas.
    Another thing, most apt. building managers are having hard time to fill the ever increasing vacancies as people leave town for lack of jobs but my guess is the builders take advantage of cheap materials and labor in the hope the market recovers soon. Good luck. They gonna need it.

  40. The Woodsman says:

    Ottovbvs, The point of my article is that there is little going on as I can see in building of new construction in my area. My thought was that this link would be interesting to those reading here. I sit on our local Zoning Board and we have had zero new buildings go up in our town in the last 18 months. Houses are selling, but prices have not stopped falling. I had dinner Saturday with a local realtor friend, he said he sees no bottom in residential real estate yet, he’s been at it over forty years. Take it for what it’s worth.

  41. retrogrouch says:

    Feb is traditionally a little higher than Dec and Jan. – It’s called winter thaw in lots of the country. And we had really awful weather for Dec. and Jan. so a little of it is displaced or spill over. Ho wanyone finds hope in this is beyond me.

  42. retrogrouch says:

    Feb is traditionally a little higher than Dec and Jan. – It’s called winter thaw in lots of the country. And we had really awful weather for Dec. and Jan. so a little of it is displaced or spill over. How anyone finds hope in this is beyond me.

  43. try2bamused says:

    Please people, can’t the bulls enjoy their grasping at straws for a change? Don’t you know that the crisis is over! the bottom is in! mission accomplished!

  44. Stuart says:

    This headline fits nicely into that thrust that Jon Stewart was point out. Built in media bias. This headline was not an accident.

  45. By Allen Smalling “Constant Reader,”

    “Do commas go where they go for breathing, as the do-it-naturally school of non-grammar so many of us were exposed to would have it? Or were they for Medieval chanting or, more analytically, for grammar? Truss explains that it’s a mish-mosh of all three, and proceeds to make useful sense of it all. Along the way she confesses she would have gladly borne the children of the 15th-Century Italian typographer who invented Italics and the forward-slash. ”

    even a version for the kinder:

    you know, for the reference~ though, maybe we should fwd: Lucia a copy of Ms. Lynne Truss’ book..