How, Exactly?

I don’t get it. I’m not going to complain by any means, but I don’t quite understand how the new home construction projections surged up 22% from January. Steven Bernard of the Associated Press reported this morning that, “The Commerce Department said new home construction rose to an annual rate of 583,000 in February from a revised 477,000 in January. Economists forecast construction would drop to a pace of around 450,000 units, according to Thomson Reuters. Building permits, a key measure of future activity, also rose unexpectedly.” Economists were predicting a 6% decrease, and suddenly there’s a 22% increase in projections? What gives?

Jeff Bater and Brian Blackstone of the Wall Street Journal may not have offered any explanation on the projection, but they did address my question/concern: “…some are wary a rebound in home construction will only add to the glut of inventories, particularly, new homes at higher prices-an especially tough sell in this market.” Yes gentlemen, I’m wary. Chew on these stats that they went on to rattle off: “Sales of new homes have fallen for six consecutive months through January and are down nearly 50% from January 2008, while inventories have ballooned to a supply of 13.3 months, which is driving prices lower and holding off would-be buyers.” And so I’ll pose the question again…what on earth made the projections of home construction rise 22% from last month? I feel like the Commerce Department is just playing with our emotions to build some confidence. Well, confidence with a healthy dose of skepticism…but as of today, it seems to be working.


Andrew Brentan

6 thoughts on “How, Exactly?”

  1. Rebecca @ San Diego

    It’s hard to know what to believe, you see all of these reports and you feel that they are shown in the best light based on the point of view the writer / article is trying to get across.

  2. My guess is that this could be people who have a lot of money; people to whom building a whole estate would not make much of a dent. With the idea that they can build hoses cheaper now and sell them for a large profit when houses prices go up.

    Or is that just a theory something someone who knows nothing about housing would come up with?

    David’s last blog post..Free Web Design Icon Set

  3. It’s hard to know what to believe, since the reports aren’t true always , they just say the half trues or change the facts.

  4. I wonder if a lot of the 22% might have been apartments? That does seem like a huge % of new home construction in an area that has such a huge number of homes on the market-it could be the stats are just biased or spun to show desired results-stats can always be twisted a little so you have to look careful at what excatly the stat is showing.

  5. NPR reported on this and alluded to it being a micro-boom in multi-family apartment construction starts that led to an increase of 22% over the previous month. However, these gains aren’t what they seem as January was unusually low – meaning that housing starts are still down substantially.

    Cheers,Harry,Panama property

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