Following an infrequent upward revision, housing starts fell 14.8 percent. Ignoring revisions housing starts still would have declined 8.8 percent. It’s a bad start to 2024.
Housing starts dropped 14.8 percent in January according to the Census Bureau’s New Residential Construction Report.
Building Permits
- Privately‐owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,470,000.
- This is 1.5 percent below the revised December rate of 1,493,000, but is 8.6 percent above the January 2023 rate of 1,354,000.
- Single‐family authorizations in January were at a rate of 1,015,000; this is 1.6 percent above the revised December figure of 999,000.
- Authorizations of units in buildings with five units or more were at a rate of 405,000 in January.
Housing Starts
- Privately‐owned housing starts in January were at a seasonally adjusted annual rate of 1,331,000.
- This is 14.8 percent (±10.2 percent) below the revised December estimate of 1,562,000 and is 0.7 percent (±11.7 percent) below the January 2023 rate of 1,340,000.
- Single‐family housing starts in January were at a rate of 1,004,000; this is 4.7 percent (±11.6 percent) below the revised December figure of 1,054,000.
- The January rate for units in buildings with five units or more was 314,000.
Housing Completions
- Privately‐owned housing completions in January were at a seasonally adjusted annual rate of 1,416,000.
- This is 8.1 percent (±10.0 percent) below the revised December estimate of 1,541,000, but is 2.8 percent (±14.6 percent) above the January 2023 rate of 1,377,000.
- Single‐family housing completions in January were at a rate of 857,000; this is 16.3 percent (±7.9 percent) below the revised December rate of 1,024,000.
- The January rate for units in buildings with five units or more was 538,000.
Margins of Error
Note the margins of errors on starts (±11.7 percent) and completions (±14.6 percent).
The Census Department has little faith in the numbers and neither do I.
Housing Starts 1959-Present
Housing starts are well below where they were in 1959.
The average since 1959 is 1,483. So starts are 10.2 percent below the long-term average.
We are nearly smack in the middle of immense swings.
Housing Starts Single Family vs Multi-Family
Existing Home Sales
Existing home sales fell for the 20th time in 23 months to a level last seen in 2010. Annual sales are at the lowest total since 1995.
For discussion, please see Existing Home Sales Drop to Lowest Full Year Total Since 1995
NAR Chief Economist (Cheerleader)
“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”
My Opinion
Never a worse time to buy.
Mortgage rates are down from 7.9 percent to 7.14 percent. But the median price is the highest ever. Until we see a combination of lower price and lower mortgage rates, home sales are headed nowhere even if they have bottomed.
Whereas the overall consensus thought there would be a recession last year, almost no one thinks so now. If we head into recession, the bottom is not in.
Too many people are stretching to buy a house, needing a huge percentage of their annual income to do so. To maintain standards of living, credit card use is soaring.
Tapped Out Consumers? Retail Sales Unexpectedly Take a Big Dive
Retail sales took a big dive in January, down 0.8 percent. Negative revisions took away another 0.2 percent in December.
For discussion, please see Tapped Out Consumers? Retail Sales Unexpectedly Take a Big Dive
2024 is off to a very bad start.
Housing is never going to go down materially in nominal terms. Immigration is out of control and barely any single family homes are being built, particularly in desirable areas (Bay Area, East King County, WA, Miami, etc).
I’m in a growing suburban area of a major lower-Midwest metro. House is a custom build, nothing too fancy, decent sized detached lot (not a neighborhood). 2,300 finished sq. ft., but a 1,000 sq. ft. basement that is unfinished but usable space. Three car garage. Total package about a decade ago was just under $400K. Prior to the interest rate hikes, I bet my home would’ve sold for around $525K. After the hikes, I would have thought that affordability would’ve significantly reduced the value. The problem is that the same group of builders I got quotes from all would want around $700K for the same package. A relative sold a high end neighborhood production home for around $250K, $600K+, than what he paid for it to be built about five or so years ago.
I follow RE in other areas where my wife and I might move to in less than a decade just prior to full retirement. Knoxville, not even that big of a metro area and where incomes are usually lower, has insane housing costs. A housing company is even accused of getting local media to pull a story or two about rent prices. link to streetlightnews.org
Basically, I see RE prices at ridiculous levels given wages have not risen enough to justify sky high prices. I just looked at Colorado Springs. To get the same level of house I have here, likely taking a hit in usable space, I’m looking at a minimum of $650Kish with most of the homes listing much higher into the seven figures even.
What will the median price of a house be in ten years when the CBO projected government debt is 54 trillion ( Which means it will be 60 trillion).
My guess is 20% to 40% higher?
Easily, in places with top jobs it wouldn’t surprise me to see them 60% to 100% higher.
Mish , who gives a shit about 3, 5 or even 10% mortgage rates ,the latter would be very healthy btw….Russia is now defeating Whorekraine big time , it should be none of their fckn business, nevertheless, what you think your Deep State morons gonna do about it ? That s the BIG question related to,our future NOT mortgage rates ….
3% mortgage rates may be one reason why housing inventory is low, but people borrowing against their equity may be the other reason for low inventory. Many people who bought a home in the last 4 years, may have to fork out money to sell their homes.
Indeed, horrible time to buy.
Might I indeed be interesting to figure out (empirically) how (1) locked in low mortgage rates, (2) rising home equity, and (3) baby boomers sticking to their dwellings has affected housing supply.
I got all 3 and folks trying to buy it. no way that’s happening
It’s simple. As a result of those 3 things, we have the lowest inventory in decades and it’s not gonna change any time soon.
Im a perfect exaple. I have a house i bought 20 years ago thats worth 4-5 times what I paid. It’s way to big for the two of us but I won’t sell it. Why should I?
My teal estate taxes woumd go up 800% My insurance would go up at least 200% and god forbid, if I took out a mortgage my payment would double. Not to mention the transaction costs of selling and buying and the cost to move.
Ill stay right here in a great house that I love in a great location. Wr have too many rooms and a giant yard, but thats a good problem to have.
Good luck to anyone looking on finding a nice house at a decent price!!! Mine’s not for sale.
Weather.
Massive deflation is the ONLY thing that solves this
The leveraged and overleveraged, including the US Gov, are desperate to keep this bullshit ponzi going
I hope they LOSE
Housing start are below 1959. They collapsed in 2009. Since the 2009 nadir they rose from 500K to 1,800K, parallel to the rise from 1991 to 2006. The rise from 2009 low might cont. The trend is up. The housing sector might be taking a break, adjusting to higher mortgage rates, in a trading range, in a temp saturation. Trump’s RE collapse is NYC stopping action.
The problem is that we’re not building enough homes, not enough new starts. So, Case-Shiller Home Price Index is not falling.
S&P CoreLogic Case-Shiller U.S. National Home Price Index (CSUSHPINSA) | FRED | St. Louis Fed (stlouisfed.org)
Only price increases generated by demand, irrespective of changes in supply, provide evidence of inflation. There must be an increase in aggregate monetary purchasing power, AD, which can come about only as a consequence of an increase in the volume and/or transactions’ velocity of money.
Asset prices were driven higher by the FED’s artificially suppressed interest rates.
We have a record number of units under construction. Subject of a later post today
Not where people prefer to live. And not providing anything even remotely close to decent price/value.
It’s going to take a lot more bailouts to keep this going.
re: “To maintain standards of living, credit card use is soaring.”
As DR. Ravi Batra pointed out in his book: “Greenspan’s Fraud”:
“If demand and supply are to be balanced over time, then either wages rise in sync with productivity, or productivity growth must be matched by the growth of wages plus debt…so debt growth was the only way to maintain demand-supply equilibrium from the 1970s till today.”
Does this guy have an economics PhD from Trump University? There are plenty of OECD countries where real wages moved with labor productivity since the 1970s, but real household debt kept going up.
That’s a given.
It would take the equivalent of a University of Trump grad, to even begin falling for the nonsense that either “labor productivity” or “real” wages are even theoretically “measurable.”
And if they were: Real wages would mean wages adjusted for inflation. Actual inflation. Not some weird, arbitrarily made up children’s magic spell involving baskets. But inflation of money supply. Which,in the age of unlimited bailouts and activist central banks; resolves to outstanding credit. In which OECD country have the average Joe’s wages kept up with credit growth since ’71? Are there some outlier with massive natural resources developed since then? It’s possible, but I doubt it.
You left me in the dust. Not sure why there should be the relations between the money supply (liability side of monetary sector), outstanding credit (asset side of monetary sector), and the average Joe’s wages. Real wages since 1971 grew in all OECD countries (otherwise they wouldn’t be in the OECD), but real credit growth is usually faster than real wage growth for reasons that have nothing to do the determinants of real wage growth.
Inflation refers to money supply growth. As in: Inflation of the money supply.
That settled, the issue then becomes: What money supply? Narrow, cash in circulation; or broad?
IF there exist NO possibility of any bailout; then focusing on narrow money supply; meaning effectively Gold held by the public; makes sense. Even though instant effective, demand driving, money supply will no doubt be higher during booms and manias due to people in the midst of a mania accepting non-specie paper in good faith: As soon as the mania passes; ALL the unbacked credit will evaporate; hence leaving the long term money supply unchanged.
OTOH; if some of the unbacked credit extended during a boom is bailed out during the ensuing bust: That portion will then permanently add to money supply. Hence represent inflation. Meaning: Any relevant inflation measure will have to take this into account.
And finally: Once virtually ALL credit extended; by anyone, anywhere; is de facto guaranteed to be bailed out: You arrive at a situation where the effective money supply can never shrink back to below credit extended: Since no credit; no matter how unfounded; will ever be liquidated. Hence, the effective money supply will equal ALL monetary aggregates; up to AND INCLUDING all extended credit. That is the situation we have today.
Hence: In lock limit fully financialized dystopias like the one we currently suffer through: The relevant money supply is the one which includes absolutely ALL money like instruments; even including outstanding credit. And hence; the relevant measure of inflation; meaning the change in the relevant money supply; hence becomes the change in all money like instruments; including outstanding credit.
The reason you won’t easily find reference to it in any literature is that: Back when economists still studied inflation: Noone, even in their worst nightmares; imagined something as fleeting as an unbacked credit card balance, loanshark dope loan nor Las Vegas margin grant, would ever be 100% backed by unconstrained new issue by central banks. And furthermore: Well prior to such atrocities becoming the norm; once-were “economists” had long since left inflation studies behind; in favor of various exercises in regime apologetic,mumbo-jumbo alchemy involving magic spells and arbitrary “goods baskets.”
Do any of you read REAL news? Disposable income is up and rising. That’s money AFTER taxes, expenses etc.
Credit card USE is up, but delinquencies are historically LOW. This is because we pay for everything with credit cards and pay them off every month. 99% of us at least.
Equity in our homes is at recird HIGHS.
Stop reading all the clickbait doom and gloom chicken little crap. As a country, we’re better off than we’ve ever been!!!!!!
“Disposable income is up and rising”
In Zimbabwe,sure.
Measured in something a tiny bit harder to simply print out of thin air; say San Francisco housing units: How many more of those do you reckon the average returning GI can now afford, compared to in the late 40s?
No one WILL report how many HOME OWNERS (OWNERS!) are using their Credit Cards to pay for VARIABLE LIVING EXPENSES, such as Food, Fuel, Clothing and Shelter repairs/upgrades. The stats are not there. They are not tracked. I recall that by the time we were in our BIGGEST (useless space) Luxury home (expensive), we decided to NEVER use a Credit Card again to pay for upgrades.
Instead, we SAVED money from our incoming Cash flow (esp my Bonuses) and waited to build our fancy Deck, and then ADDED sprinklers, and BETTER Furniture.
We never borrowed again to own a home after that and paid CASH for a much smaller 1800 Sq Foot Mountain home (nearly new, only a year old) and we did ALL of the maintenance ourselves except for exterior painting which we paid a guy to do.
I wonder how many KIDS today would manage their Home expenses in a conservative way or will they BEG Dad and Mom for “contributions” and then BORROW using Credit cards to maintain and upgrade their homes?
For Americans, credit cards are the financial equivalent of opioids. Americans (especially Gen X) are addicted to credit card use. The median credit card balance of Americans is about $6,000; for Canadians it’s $1,600. Even when I studied economics 40 years ago, the phenomenon of running up credit card debt at 20% percent interest was treated in economics textbooks as a type of addiction.
The overwhelming majority of card balances are paid in full each month, often earning the users a few % in kickbacks. To make the claim that credit cards are sone kind of addiction you need to have data on actual interest payments being charged to credit card users. It’s always the case that some people learn the hard way but I don’t think this is any worse now than 20 or 30 years ago.
In 2019, US credit card debt was close to $1 trillion, and credit card companies earned close to $100 billion in interest. If, for simplicity you assume an interest rate of 20%, about 1/2 of credit card balances ($500 billion) were not paid off. And, if everybody would indeed pay off credit card balances in full, we wouldn’t get 3-5 credit card offers every month.
I don’t think KIDS today has any idea of what expenses are needed to maintain a home. I told a friend of mine she should only be living off 50% of her take home pay. The other 50% should be saved for retirement, emergencies, paying cash for a car, vacation, etc. Except for a house the motto s/b “If you can’t afford to pay cash then you can’t afford to have it.
Morgage rates go up to where they were in the year 2000 and housing starts fall to the level they were in the year 2000.
As all honest endeavor grinds to a halt, the inflationists must double and triple down to push prices higher. It is their only game and function. Their accounts will be awash in funny money as they try to ward off the most dreaded of all outcomes. Deflation.
The very word strikes terror and doom into their greedy hearts.
I actually think that there IS ONE worse level: STAGFLATION.
Well yes, stagflation like we have now is worse for you and me. In fact I would love deflation. But deflation is what the inflationist money mongers fear the most. It will end their game.