The Census Bureau’s New Residential Construction report came out today. Let’s take a detailed look at starts, permits, completions, and still more huge revisions.
Please consider the Census Department New Residential Construction Report for July 2023.
Permits
- Privately‐owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,442,000.
- This is 0.1 percent above the revised June rate of 1,441,000, but is 13.0 percent below the July 2022 rate of 1,658,000. Single-family authorizations in July were at a rate of 930,000; this is 0.6 percent above the revised June figure of 924,000.
- Authorizations of units in buildings with five units or more were at a rate of 464,000 in July.
Housing Starts
- Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,452,000.
- This is 3.9 percent (±16.0 percent) above the revised June estimate of 1,398,000 and is 5.9 percent (±16.1 percent) above the July 2022 rate of 1,371,000.
- Single-family housing starts in July were at a rate of 983,000; this is 6.7 percent (±13.0 percent) above the revised June figure of 921,000.
- The July rate for units in buildings with five units or more was 460,000.
Housing Completions
- Privately‐owned housing completions in July were at a seasonally adjusted annual rate of 1,321,000.
- This is 11.8 percent (±7.8 percent) below the revised June estimate of 1,498,000 and is 5.4 percent (±11.1 percent) below the July 2022 rate of 1,396,000.
- Single-family housing completions in July were at a rate of 1,018,000; this is 1.3 percent (±11.6 percent) above the revised June rate of 1,005,000.
- The July rate for units in buildings with five units or more was 297,000.
Please note the margins of error in these reports. It’s been revision, after revision, after revision, mostly negative.
Housing Starts Single Family vs Multi-Family
Housing Starts, Permits, Completions Since 2000
Housing Starts 1959-Present
To put the rebound from 2010 in perspective, housing starts are still well below where they were in January of 1959.
That’s the strong cyclical nature of new home construction.
Revisions
Last month, I commented Housing Starts Dive 8 Percent in June On Top of Significant Negative Revisions
Well, not really. Thanks to still more revisions, June is now down 11.7 percent from May as the commerce department revised June from 1,434 to 1,398.
Another Heavily Revised Housing Starts Joke of a Report for May 2023
On June 20, I commented Another Heavily Revised Housing Starts Joke of a Report for May 2023
Last month I stated “History suggests the April rise will be revised away in May.”
Sure enough. The Commerce Department revised housing starts in April from 1,401,000 to 1,340,000. That’s a negative revision of 4.4 percent. The big jump in April is now a reported decline. So take the huge jump this month with with a heavy dose of skepticism.
Repeat Performance
Last month I commented “There was a big jump in May from significant negative revisions in April. And now we see huge negative revisions to May.”
Today we see June way revised significantly from May.
These residential construction reports are a total joke.
NAHB Wells Fargo Housing Market Index Dips 10.7 Percent in August
The National Association of Homebuilders (NAHB) Housing Market Index (HMI) resumed its slide in August. Traffic remains in the gutter.
For discussion, please see NAHB Wells Fargo Housing Market Index Dips 10.7 Percent in August
It would be interesting to know which end of the market is doing better. I’ve both heard that builders are building smaller homes/fewer frills to remain affordable with high rates, and also that the wealthy are paying cash so the high rates don’t affect the high end. Is any data available on this issue?
prices falling in working class hoods here in my little village of kings county, nyc.
As Dr. Philip George says: “The velocity of money is a function of interest rates”
As Dr. Philip George puts it: “Changes in velocity have nothing to do with the speed at which money moves from hand to hand but are entirely the result of movements between demand deposits and other kinds of deposits”.
Link:
https://fred.stlouisfed.org/series/LTDACBM027NBOG
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.8 percent on August 16, up from 5.0 percent on August 15. After this morning’s housing starts report from the US Census Bureau and industrial production report from the Federal Reserve Board of Governors, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 4.4 percent and 8.8 percent, respectively, to 4.8 percent and 11.4 percent.”
Now, strip out the portion of GDP that increased due to debt-backed Federal govt. spending that exploded in Q3 due to the debt ceiling governor being removed and what is the resulting GDP?
GDP is continually morphing into just a barometer of govt. debt, IMO.
The 2 factors for today’s increase are personal consumption expenditures and private domestic investment, neither of which are directly related to any government spending.
The cash/drain factor has reversed in the last two months.
Just realized I was a quarter early for the govt spending blowout affecting GDP due to the debt ceiling removal. Please disregard that paragraph. My last sentence stands.
Mish, please bring back the comment edit and/or delete capability.w
Yeah, Hubert Hoover’s “pump priming” outside of a recession.
Much like a useless Corporate Tax Cut in Dec 2017- Never ever forget, the prior admin issued 3.2 Trillion in New Debt BEFORE Covid- why is that homie- cause they’re all grifters – enjoy 🙂
“There is considerable uncertainty in the outlook, but we estimate that these excess savings are likely to be depleted during the third quarter of 2023.”
– San Francisco Federal Reserve Bank
Lending by the banks is inflationary ( S ≠ I ), whereas lending by the nonbanks is noninflationary ( S = I ), other things equal.
The paradoxical solution is to drive the banks out of the savings business (which doesn’t reduce the size of the payments’ system), activating monetary savings. The 1966 Interest Rate Adjustment Act is the model. And the FDIC should reduce deposit insurance back to $100,000 per social security #.
Interest is the price of credit. The price of money is the reciprocal of the price level. Savings is not synonymous with the money supply.
The activation of bank-held savings, the movement of money from the banks and channeled THROUGH the nonbanks, increases money velocity.
This is reflected in the surge in money market funds:
https://fred.stlouisfed.org/series/MMMFFAQ027S
It is likely that saver-holders spend some of their balances before recommitting them.
Some people don’t know a debit from a credit. An increase in bank CDs adds nothing to GDP.
Savers (contrary to the premise underlying the DIDMCA in which DFIs are assumed to be intermediaries & in competition with thrifts) never transfer their savings out of the banking system (unless they are hoarding currency). This applies to all investments made directly or indirectly through intermediaries.
Shifts from TDs to TRs within the DFIs & the transfer of the ownership of these deposits to the NBFIs involves a shift in the form of bank liabilities (from TD to TR) & a shift in the ownership of (existing) TRs (from savers to NBFIs, et al). The utilization of these TRs by the NBFIs has no effect on the volume of TRs held by the DFIs or the volume of their earnings assets. I.e., the non-banks are customers of the deposit taking, money creating, DFIs.
In the context of their lending operations it is only possible to reduce bank assets, & TRs, by retiring bank-held loans, e.g., for the saver-holder to use his funds for the payment of a bank loan, interest on a bank loan for the payment of a bank service, or for the purchase from their banks of any type of commercial bank security obligation, e.g., banks stocks, debentures, etc.
See: “Should Commercial banks accept savings deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43. By Dr. Leland James Pritchard, Ph.D., Economics, Chicago 1933, M.S. Statistics, Syracuse (Phi Beta Kappa).
It’s just like the “time bomb” in 1981.
That’s what the 1966 Interest Rate Adjustment Act is all about:
“A number of participants noted that balance-sheet runoff need not end when the committee eventually begins to reduce the target range for the federal funds rate,” according to minutes of the US central bank’s July 25-26 policy meeting published Wednesday in Washington.
The approach — which some policymakers including Chair Jerome Powell have mentioned — could present communication challenges for the US central bank. That’s because reducing bond holdings — a process known as quantitative tightening, or QT — is usually interpreted as strategy for tightening monetary policy. Interest-rate cuts, however, work in the opposite direction, easing policy by lowering borrowing costs.”
This has become the rule, not the exception. In every government report the initial reports are always positive and above the consensus. The later revisions are not reported as widely or with great enthusiasm. A few words under reported, mumbles not shouts.
re: “housing starts are still well below where they were in January of 1959”
Data mining at its best. The U.S. Golden Age in Capitalism (George Bailey’s “It’s a Wonderful Life”), was where small savings were pooled and expeditiously activated by the nonbanks.
Back then, 2/3 of GDP was financed by velocity, and 1/3 by money (today we have the opposite scenario). But C-19 has partially reversed the trend. The composition of the money stock has changed.
It’s an accounting error. Contrary to the pundits, banks don’t lend deposits. All bank-held savings are stagnant. The demand for money is the basis for Dr. Philip George’s “The Riddle of Money Finally Solved” (the “single error” in macro).
Shadow stats explains: “The Federal Reserve Overhauled Its Money Supply Reporting, Redefining Traditional M1 from 34.8% to 93.4% of a Not-Redefined Total M2 • This Masked Accelerating Flight-to-Liquidity in Traditional M1 from Non-M1 Components of M2 • ShadowStats Defined “Basic M1″ — Combined Currency and Demand Deposits — Still Reflects the Extraordinary Liquidity Flight to, and Surge in the Narrower Money Supply”
The “narrower money supply” is our “means-of-payment” money.
thanks for that comment. shadow stats is a national treasure. most bloggers and analysts don’t williams methods. stagflation baby. ain’t no deflation