Housing Starts Seasonal Adjustment Statistical Nonsense

Mish

Housing starts were reportedly up 1.9% to 1,415,000 SAAR. Hooray?

New Residential Construction

The New Residential Construction Report shows housing starts rose 1.9%, permits 5.2%, and completions 15.3%.

September Stats

  • Starts: 1,415,000 SAAR. This is 8.8% above the revised August estimate of 1,388,000.
  • Permits: 1,553,000 SAAR. This is 5.2% above the revised August rate of 1,476,000.
  • Completions: 1,413,000 SAAR. This is 15.3% above the revised August estimate of 1,226,000.

August Stats as Initially Reported

  • Starts: 1,415,000 SAAR.
  • Permits: 1.470,000 SAAR

Actual Numbers

  • Starts: 125,000
  • Permits: 134,200
  • Completed: 121,000
  • The census bureau took 125,000 starts and translated those to 1,415,000 units SAAR.
  • The data is heavily revised such that a 0% gain vs the prior month is reported as a 1.9% gain.
  • In addition, Covid hugely distorted the seasonal adjustments by pushing normally strong Spring numbers into the Summer.

The result is statistical nonsense that fluctuates wildly as reflected in the lead chart.

For further discussion, please see Discounting Revisions Housing Starts Were Flat

Mish

Comments (10)
No. 1-4
PecuniaNonOlet
PecuniaNonOlet

13 days till election. Is America great again yet?

TimeToTest
TimeToTest

A 2x4x8 at Lowe’s is $6.57. Don’t see the housing market banging along for long. Add that to higher interest rates and you have the perfect storm.

I work with a guy that is building a house. His lumber cost have climbed 30k so far. Still have more lumber to purchase. I imagine many other cost will also climb.

Oxidado Blanco
Oxidado Blanco

That would certainly explain the huge moves in lumber futures....

Julian1
Julian1

this is a very informative post, thanks for sharing!

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