Thursday, January 19, 2012

Housing: Frame of Reference Important

The Lehmann Letter (SM)

This morning the Census Bureau issued this report on new residential construction (

“Privately-owned housing starts in December were at a seasonally adjusted annual rate of 657,000. This is 4.1 percent (±11.6%)* below the revised November estimate of 685,000, but is 24.9 percent (±18.3%) above the December 2010 rate of 526,000.”

Although there was a decline from November to December, starts are up by one-fourth from a year ago. Looks good until you examine the chart.

Housing Starts

(Click on chart to enlarge)

(Recessions shaded)

Housing starts have hovered around 600,000 for so long that a move up to the neighborhood of 700,000 seems great. But the chart reveals how far we have to go.

This illustrates the importance of the historical or long view.

Since housing was ground-zero in the recent bust, the chart also illustrates how much improvement is needed before we can declare victory over the slump.

(To be fully informed visit

© 2012 Michael B. Lehmann

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