Home Construction Lies

[unlawflcombatnt]

CONSTRUCTION LIES

Today's Economic Calendar data showed a 0.0% increase in construction. The estimate for this number had been for an increase of 0.8%. Todays' number was MUCH less than predicted. The previous 4 months had shown declines in construction spending. At least that's what they showed as of yesterday, August 31st. However, in a typically dishonest manner, the construction numbers for previous months were ALL revised upward today. This dishonest alteration of previous numbers minimizes the obvious decline in construction spending.

Unfortunately, the numbers have been changed to protect the guilty. The new numbers miraculously break the 4-month string of construction spending declines. This change was especially pronounced in home construction spending. As with overall construction, home construction numbers for the last 4 months had also shown declines as of yesterday, August 31st. As with overall construction, today's home construction numbers have also been revised upward. (It's amazing how ALL 4 months of home construction spending were revised upward. In just one day. What a difference a day makes!)

The link to today's Briefing.com construction statistics is: http://www.briefing.com/Silver/Calendars/EconomicReleases/const.htm

Of course, there is no link to the previous "unrevised" numbers from yesterday, because those numbers were altered today.

Some evidence of the previous numbers can currently be seen at Yahoo's Economic Calendar for July 1, 2005. This shows a -0.9% total construction change in May construction over April. It also shows that a downward revision of April construction from +0.5% to -1.1%. The link for this is below. Hopefully it hasn't been "revised" since I posted this.
http://biz.yahoo.com/c/ec/200526.html
.
May's number was later revised downward even further, to -1.7%, thus making the 2-month change in construction spending -2.8%. Today's revisions made this 2-month change 0.0%! Again, what a difference a day makes!

Since I DO have a copy of the previous numbers, I'll post them myself.
Below is a comparison of yesterday's construction statistics with today's "corrected" figures.

HOME CONSTRUCTION SPENDING

As of August 31, 2005
June........May........April........March
-0.4%.....-3.4%.....-2.0%......-0.5


As of September 1, 2005
June........May........April........March
-0.2%.....+0.4%.....-1.0%......-0.3




TOTAL CONSTRUCTION SPENDING

As of August 31, 2005
June........May........April........March
-0.3%.....-1.7%.....-1.0%......-0.2

As of September 1, 2005
June........May........April........March
-0.6%.....+0.4%.....-0.4%......+0.3

Apparently the financial industry "under-estimated" home construction in May by 3.8%. It's certainly reassuring that they're diligent enough to go back 4 months and correct previous "mistakes." Now we don't have to fret about home construction spending declining for 4 months straight. It was simply a mistake. There was a whole lot of new home construction spending they hadn't been aware of. I'm certainly glad they were able to rectify their "mistake." Yes indeed, the economy certainly is "strong, and getting stronger." Once again, this administration and its allies take a "creative" approach to facts. If the facts don't fit the assessment, they just go back and change the facts.

[wli]

1. What about the "housing bubble?" n/t

[unlawflcombatnt]

2. Home Construction & the Housing Bubble

Home construction decline indicates decreased current and anticipated demand for homes. By upwardly revising the home construction numbers, it makes it seem like there is more demand for homes than there was previously.

Home construction is still stagnating, if not declining, even with the new numbers. These "revised" numbers just make it appear that the decline is less, and that the housing bubble isn't deflating as fast.

[OneTwentyoNine]

3. Home construction could rise 10% in one month and mean nothing.

They need to spend less time on housing starts and more time on housing closings. Guess they've never heard of "spec" houses?

Even when buyers start declining builders will keep building. Why? because they only way they get paid is through the bank loan they took out on the construction. They "draw" on it,sometimes they draw it down to zero and sub contractors get stiffed--believe me,I been on the shit end of that stick.

That scenario is exactly what happened in 1982/83. The bubble burst,builders had unsold houses everywhere and the whole market collapsed. It could happen again very easily.

[unlawflcombatnt]

5. Thanks

Thanks for your insight.

From what you said, it sounds like there could be a lot of home starts, despite declining demand, simply so the builders could get loans for home building. Then they could use those "home building" funds for something else. Is that right?

If so, this makes a housing bubble collapse sound even worse than it already sounded.

[ShockediSay]

6. Wanna bet these housing starts are skewed toward the palatial?

The folks who got the most money out of the tax cuts, who have the benefit of low interest rates, are building plantation manors like never before.

Wanna bet that affordable housing starts are at an all time low?

[unlawflcombatnt]

7. Housing Speculators

I suspect a lot of those tax cuts went into buying "investment" homes. Those buying multiple homes have greatly increased the demand for homes. As a result, the price has increased in many areas to a level that few can afford homes. In Southern California, only 14% of residents can afford a median-priced home. Again, a lot of this price increase is due to investment buyers who have bought multiple homes. It's estimated that over 36% of homes bought during the last year are non-residential homes. In some areas, such as San Diego, the percentage of homes bought for investment purposes is 75%.

[Pharlo]

4. Projected new home growth figures will probably be increasing

short term - One month to two years

[formernaderite]

8. I work in construction...no slowdown that I perceive...

yet. Developments we've been working in, get sold out quickly. Here in the DC area, there's virtually no risk in building NEW housing. Older resales are sitting on the market longer. The housing developers do protect themselves better now, in that they build in phases.

[unlawflcombatnt]

9. Housing

That's definitely not the case nationally. New home prices have declined 0.4% over the last year, and 7.7% in the last 3 months. Growth in sales has declined in most major markets.

Washington DC may be showing less home appreciation decline because of its employment base. The high number of government jobs makes job and income increase more likely.

On the West Coast, however, home appreciation is slowing dramaticly. Both San Diego and San Francisco have shown large declines in home appreciation. Given the tenuousness of employment and wages, this decline will continue.