Menu Close

Wow! Check Out The New Home Sales Recovery Bernanke is Taking Credit For

The media reported a 16% rise in new home sales in January to the highest level in 4 1/2 years based on data from the Commerce Department released today. The headlines were based, as always, on seasonally adjusted data.  The not seasonally adjusted data was also rocking, showing a year to year gain of 34.7% for January, and a gain of 47.6% since January 2011, which was near the bottom in new house sales. Sales have risen from 21,000 units in January 2011 to 31,000 units in January 2013. Look at the trend on this chart. Awesome!

New House Sales - Recent
New House Sales – Recent – Click to enlarge

Here’s how Dow Jones’s Marketwatch put it.

Sales of newly constructed U.S. housing jumped almost 16% in January — hitting the highest level in 4½ years — offering strong proof that the sector’s rebound trend is intact.

Sales of new homes rose to an annual rate of 437,000 last month from an upwardly revised 378,000 in December, marking the biggest one-month gain since 1993, the Commerce Department said Tuesday. The figures are seasonally adjusted.

The pace of sales easily blew by the 384,000 consensus estimate of the economists polled by MarketWatch.

I skimmed through the lead-ins for this story in Google News, and trust me, this wasn’t even close to being the most ebullient.

So to give you a better idea of just how fabulous this mammoth recovery is, here’s a long term perspective. It looks fabulous, doesn’t it.

New House Sales
New House Sales- Click to Enlarge

Wait a minute! That 48% gain looks a little different from this angle. The range of 20,000 to 40,000 unit sales per month since 2009 compares with a range of  80,000 to 130,000 per month in the early to mid 2000’s. Could Bernanke be exaggerating just a little when he claims credit for a housing recovery?

Looking at single family housing starts versus new house sales, the pattern is similar. Starts are up from 26,600 units in January 2011 to 39,600 units in January 2013, a whopping gain of 49%. But the numbers today are only 30% to 50% of the levels of 2000-2005. Of course 2005 was when the housing bubble was getting ready to drive the economy off the cliff, but current levels are still only half what they were in the recession years of 2001 and 2002.

Housing Starts and New House Sales- Click to enlarge
Housing Starts and New House Sales- Click to enlarge

The charts make it plain that while housing is no longer a drag on the economy, its net positive contribution to economic growth isn’t much. The Fed may claim credit for the recovery, but it hasn’t gotten much bang for the trillions it has printed since 2008.  What the Fed has gotten is a return to house price inflation (another story), but it hasn’t really gotten a recovery.

Read Commodity Selloff Gives Fed Room and Reason To Increase QE

Follow my comments on the markets and economy in real time @Lee_Adler on Twitter!

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!

 

Sign Up To Receive Free Wall Street Examiner Email Bulletins

Lee AdlerGet a “heads up” on these lively, informative commentaries on the latest economic and financial data.

You will receive one or more free e-letters each week featuring an excerpt from a current Wall Street Examiner Professional Edition report or from an exclusive report on current economic data releases to help you to cut through the media spin and give you a clear picture of what’s happening  in the markets and the economy.

Thanks for joining me in the search for reason and clarity in this treacherous environment!

Lee


 

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading