The Cynical Times doesn’t even have to read the spate of preview stories for June housing activity to tell you what these predictable misrepresentations are going to say.
Housing starts, a measure of new construction, will be historically low in June, but will probably rise a small amount from the prior month. The wires will make it sound more positive than it is by leaving out the monthly average since 2000 and focusing just on the post-bust period.
If the editors and reporters involved are particularly clueless (always a possibility with the AP and NYT eco teams), they may try to attribute the small increase to the better summer weather. That’s baloney given that the numbers are already seasonally adjusted to account for the annual uptick each summer due to nicer weather.
Sadly, some of the folks who write this stuff still don’t seem to understand what a seasonal adjustment does.
A seasonal adjustment seeks to remove the predictable so you can focus on the unpredictable. It smooths out the winter numbers, when traffic drops because it’s so cold, and the summer numbers, when it spikes. This post serves the same function.
It’s also safe to say that the June starts comparison with the prior month will be inflated by the downward revision of the number of homes sold in May.
Once upon a time, housing stats undershot as often as they overshot, but they now seem to be revised downward more often. That helps the headline numbers look more favorable.
The bottom line is that true housing activity will continue to disappoint until the industry rebuilds its broken bond of trust with consumers via greater regulation. Until then, homebuilders will continue to try to raid the treasury via tax subsidies for homebuyers, even though that’s not what’s needed.
Housing activity is not down because of affordability. Housing is down because the industry and its professionals have demonstrated they cannot be trusted. Nothing will change until they address that problem by policing their own affinity for wholesale lies and exaggerations, and consumer predation.