Sunday, January 25, 2015

December’s new housing starts and existing home sales, et al

the only widely watched releases of the past week were both housing related; New Residential Construction for December (pdf) from the Census Bureau, and Existing Home Sales for December from the National Association of Realtors (NAR); the week also saw the release of the Kansas City Fed manufacturing survey for January, which covers a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and which indicated a weaker expansion as energy related manufacturing contracted; in addition, the Philadelphia Fed released it's relatively new Nonmanufacturing Business Outlook Survey for January, which like the manufacturing survey from the same New Jersey, Delaware, and Pennsylvania region, saw its broadest diffusion index fall from a highly expansionary reading of 47.5 in December to 8.8 in January, also probably indicating a slowdown in businesses serving the energy industry....then on Friday, we saw the release of the December Chicago Fed National Activity Index, a weighted composite index of 85 different economic metrics, which fell to -0.05 in December from +0.92 in November, indicating growth slightly below the historical trend...

New Housing Permits and Starts Continue at a Million a year Pace

as you should all know by now, the Census reports on new housing are based on a survey of a small percentage of permit offices visited by Census field agents and have such a wide margin of error that they're useless for any analysis other than looking at the long term trend, but we still feel the need to point that out, as blog & media coverage still quotes the data as gospel, omitting any mention of a margin of error...the Census report on New Residential Construction for December (pdf) estimated that new housing starts were at a seasonally adjusted annual rate of 1,089,000 in December, which was 4.4 percent (±11.7%)* above the revised November estimate of 1,043,000 and 5.3 percent (±12.7%)* above the December 2013 rate of 1,034,000...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts rose or fell for the month or even for the year...and of course, the annual rates are just extrapolations from the field agent survey, which which estimated 73,300 housing units were started in December, down from 78,400 in November, which was revised up from 77,500, with 48,000 of those December starts being single family dwellings, while construction was started on 23,800 apartment units in buildings with 5 or more units... adding those unadjusted monthly estimates for the 12 months of the past year, Census reports an estimated 1,005,800 housing units were started in 2014, 8.8 percent (±2.9%) above the 2013 total of 924,900...

similarly, the monthly estimates of new building permits are extrapolated into an annual rate, albeit with a narrower margin of error than new housing starts; for December, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,032,000, which was 1.9 percent (±1.3%) below the revised November rate of 1,052,000, but was 1.0 percent (±1.1%)* above the December 2013 estimate of 1,022,000....those estimates were extrapolated from the unadjusted estimate of 80,600 new permits issued in December, which was up from the estimated 71,300 new permits issued in November...of those units permitted in December, 45,900 (±1.0%) were for single family homes, and 32,500 (±1.0%) represented permits for housing units in building with 5 or more units...for the year, an estimated 1,032,900 housing units were authorized by building permits, 4.2 percent (±0.9%) above the 2013 total...

Existing Home Sales Up 2.4% on Mild December

like the Census data, the National Association of Realtors (NAR) reports existing home sales at a seasonally adjusted annual rate, which means they're projecting how many homes would sell over a year if the seasonally adjusted sales of the given month were extrapolated over an entire year; in December, that results in a report which gives not only the seasonally adjusted annual rate for the current and recent month, but also the actual number of homes that sold over the past year....thus the NAR reported that existing home sales rose 2.4% to a seasonally adjusted annual rate of 5.04 million in December, from a downwardly-revised 4.92 million in November, while they also report that a total of 4.93 million homes actually sold in 2014, down 3.1% from the 5.09 million homes that sold during 2013...the actual unadjusted sales for December rose by 17.4%, from 351,000 in November to 412,000 in December, with all regions of the country seeing an actual increase of over 10% in home sales vs November, an increase probably facilitated at least in part by milder than normal December over most of the country...

for a more complete summary, the NAR press release, which is titled Existing-Home Sales Rebound in December, 2014 Total Sales Finish 3 Percent Below 2013, is written in plain English that's accessible to the typical reporter, so it should be easy reading for anyone who's attempted to read my summaries here...getting to the actual data on which this report is based is much more difficult...to start with, it's a four step navigation to the page where the links to the data are located (research and statistics > housing statistics > existing home sales > data summary page); then the links on the data page itself are mislabeled, and don't lead to what one would think they'd lead to based on their text; the only way to show that is to explain what each one actually is:

so, by viewing either of the last two above, we can see that the median home selling price for all housing types was $209,500 in December, up 1.1% from $207,200 in November, and 6.0% higher than the $197,700 median home sales price in December of last year, while the average home sales price was $255,800, up 0.8% from the $253,700 average in November, and up 3.7% from the $246,700 average sales price of December a year ago...for complete coverage of this report, Bill McBride has two posts, both with multiple graphs: Existing Home Sales in December: 5.04 million SAAR, Inventory down slightly Year-over-year and A Few Comments on December Existing Home Sales...similarly, he has two posts on the housing starts for December release from the Census, again with several of his very readable graphs: Housing Starts increased to 1.089 Million Annual Rate in December and Comments on December Housing Starts...also, remember that several paragraphs from all the reports of the past week, including the pdfs, can be viewed on one regular html webpage at the Research Economics page at OneWall.com

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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