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Bad Headline of the Day: U.S. Housing Starts Rebound
Posted By Barry Ritholtz On March 17, 2009 @ 11:34 am In Data Analysis,Real Estate | Comments Disabled
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.
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 
Reuters, Mar 17, 2009 9:18am EDT
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 U.S. housing starts rebound: http://www.reuters.com/article/businessNews/idUSTRE52G2RK20090317
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