The fantasy they want you to believe:
New single-family home sales fell in January, but an upward revision to December’s data and a drop in the supply of properties on the market added to growing signs of a budding recovery in the housing sector.
The reality I want you to see:
"The Housing Recovery In One Index" (Streettalk)
The Total Housing Activity Index shown here is a composite of the sales of new and existing homes, new construction permits for single family homes and new single family home starts. As you can see we are still near the same lows that we were in 2009 at the end of the recession. Furthermore, and what is really worse, is that the "recovery" was built on the bank of a whole slew of tax payer funded bailouts, tax credits and incentives from HAMP to HARP to the Home Buyer Tax Credit. Not quite the recovery the government was hoping for.
In his Friday report on new-home sales, [Associated Press journalist Derek] Kravitz noted a seasonally adjusted January drop, but trumpeted a minuscule upward adjustment to fourth-quarter sales which was barely more than a rounding error:
New-home sales dip after 4 straight monthly gains
Sales of new homes dipped in January but the final quarter of 2011 was stronger than first estimated.
The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent.
The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year.
Even with more sales, just 304,000 new homes were sold in 2011 - the fewest on records dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.
Still, the pickup in sales at the end of last year coincides with other improvements in the housing market and should bolster the view that the depressed sector is starting to revive.
[Below] is the raw data which forms the basis for Kravitz's first-paragraph placement of the fourth-quarter revision and its characterization as "stronger than first estimated."
You've got to be kidding me, Derek.
A whopping 2,000 more homes were sold in December (because of rounding, it could be anywhere from about 1,000 to about 3,000 more).
This is supposed to indicate that the industry is "starting to revive"? If Kravitz thinks that 23,000 is "stronger," he must want us to believe that original 21,000 was "strong."
"Measuring Housing’s Drag on the Economy" (Economix)
[A new paper presented Friday at a monetary policy conference in New York] says, “more than half the underperformance in this recovery is associated with housing-related sectors.”
Yes, that's right. Housing is more than half of our problem.
The details by now are probably familiar: The crash in housing prices erased a vast amount of wealth and, perhaps even more importantly, it severely restricted borrowing power. Many people are unable to refinance and unable to tap the value of their homes to finance consumption or investments.
In other words, the housing crash not only caused the crisis, it is impeding the recovery – it is interfering with the Federal Reserve’s easy-money aid campaign, which aims to promote growth by encouraging new borrowing.
“Housing problems have both offset the stimulative impact of easy monetary policy and have impaired the link between policy and the economy,” says the paper by Michael E. Feroli, a J.P. Morgan economist, and three collaborators.
The paper offers a striking way of thinking about the depth of this housing problem. It calculates that at the end of 2010, the total value of American homes exceeded demand by about 9 percent, or about $1.5 trillion.
"Warren Buffett: Housing Remains In a Depression" (Deal Journal)
Warren Buffett says the economy is improving from the devastation of the financial collapse, but that the housing world remains “in the emergency room.”
Buffett’s annual letter to shareholders Saturday spends a good deal of time self-deprecating his previous calls, as he is wont to do. He now says his statement last year that a “housing recovery will probably begin within a year or so,” was in fact “dead wrong.”
The businesses his Berkshire Hathaway empire owns that are tied to housing–including a brick maker, a pre-fabricated home builder and a building products company–reported similar pre-tax profits to last year, but less than a third of what they reported in 2006.
“This hugely important sector of the economy, which includes not only construction but everything that feeds off of it, remains in a depression of its own,” Buffett writes. “I believe this is the major reason a recovery in employment has so severely lagged the steady and substantial comeback we have seen in almost all other sectors of our economy.”