Chart of the Day: The Diverging Home Building Sectors + Housing starts up 14.6% in June to 629,000

[mEDITate-OR:
assume that all reports are basically equal
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Compare the very good effort by Daniel@Atlantic.
He may not always provide charts as nice as The PE or Bill@CR
but, what he does to is try to explain what is, and what is not, taking place.
--
The 2nd article is sadly interesting, bcuz the normally early and accurate reports from The Housing Wire got this months numbers badly wrong in their headline.
True, almost everyone else did too, but...
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JGBellHimself

Very good Daniel, not only have you been one of the few to separate out single vs multi family numbers - starts & permits, but you are one of even less who try to understand what they mean. As you must know BillatCR also is doing that, and has been predicting a large increase in multi this and next year.

However, there may be some things for you to look at more closely.

First, while we have been mentioning to you for a couple of years now, that "all cash investors" are buying up the cheapest foreclosures in the sand states, and renting bcuz they cannot sell them yet to make a profit; what is now being reported is that there is  much more competition for those homes!  And, they ask, why don't the banksters make it easier for all the rest of U.S. to buy those homes, and help drive up the prices they receive? Are the banksters stupid? Sorry, that's redundant.

Second, while you are obviously correct about people shifting from home ownership to renting, there are a few sub-currents here. One, is that back then, when they could buy a singe home, they did, in droves. Do you assume that given the chance they would not do that again? Why? Or, if they cannot buy one, they will not rent one?

While foreclosures obviously are evicting many, how many are sitting in "their" homes, not paying rent, and not moving into rental housing, yet. Are you assuming that they will move into "apartments" or "condos"? Why? We suspect that the all cash investors are NOT making that assumption.

If there is a "hidden inventory" of empty homes that we cannot live in yet, is THAT why there is such high apartment demand? Or, are people finding new jobs, and moving into a place of their own? Ya, right.

Third, while landlords are "cashing in" on high demand, and builders are rushing to fill the assumed future demand, where IS the "overbuilt" supply of homes you believe exists?

IF there is such an oversupply of "housing", and IF many, even most, of U.S. want to live in single unit housing, why are we assuming that we need a huge supply of new rental units? Is this not just another bubble?

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Chart of the Day: The Diverging Home Building Sectors
http://www.theatlantic.com/business/archive/2011/07/chart-of-the-day-the-diverging-home-building-sectors/242195/
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Housing starts up 14.6% in June to 629,000
http://www.housingwire.com/2011/07/19/housing-starts-up-14-6-in-june-to-629000
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State Unemployment Rates "little changed" in June + but not all are in the same state

[mEDITate-OR:
assume that the "state" we are in is the same as everyone else...
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While we are being told that the level of unemployment is holding steady.
What we are NOT being told is that many states are very differently being affected.
While Nev, Mich, Oreg, Illi, Ohio and Ind are much better now than they were
they are still very, painfully high.
And, while Texas is thought and said to be the jobs creating machine
Texas at 8% and Connecticut at 9% are very near their all time high, and still above the U.S. normal averages.
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This very interesting chart is shown monthly by CR
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State Unemployment Rates "little changed" in June
http://www.calculatedriskblog.com/2011/07/state-unemployment-rates-little-changed.html
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Reading Rates: MBA – July 20 = Mortgage rates relatively unchanged = 30-year loan edges up to 4.52 percent

[mEDITate-OR:
not notice that the usual MSNBC-AP chart was missing this week..., again
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The 1st chart is the regular, if youNwe can find it, 30 yer FRM chart
The 2nd chart is the PE interest rate chart attached to PE's application report each week.
The 3rd is the irregular CR chart with mortgage rates this week
and the 4th is a new-sorta REFI and interest rate chart showing U.S. The Clinton years and the WBush years - showing how much more volatile they were under W.
With Clinton we knew what he was doing...
but with W no body had a clue -
about what Cheney was telling him to do, or whether he was actually trying to do it.
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Reading Rates: MBA Application Survey – July 20 2011
http://paper-money.blogspot.com/2011/07/reading-rates-mba-application-survey_20.html
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Mortgage Rates and Refinance Activity
http://www.calculatedriskblog.com/2011/07/mortgage-rates-and-refinance-activity.html
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Fixed mortgage rates mostly flat
Average rate on the 30-year loan edges up to 4.52 percent
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Mortgage rates relatively unchanged
http://www.housingwire.com/2011/07/21/mortgage-rates-relatively-unchanged-freddie-mac
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Existing Home sales fell in June, fewer 1st-time buyers + High cancellations depress homes sales

[mEDITate-OR:
assume that things are "Normal"...
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There were two VERY interesting explanations outed this week.
to explain, if there is one...
what happened to existing home sales.
ONE, is that there were fewer 1st time home buyers.
NOT, bcuz the new home buyer's tax credit no longer exists...
but, bcuz there actually ARE fewer 1st time home buyers.
Of course, the unemployment numbers and no job creation numbers have nothing - absolutely NO think to do with this...
Second is that there were a very large number of unexplained cancellations.
That is not normal, and needs to BE explained.
Why? And, why now?
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There is the old question:
"What do they know that we do not?"
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Existing Home sales fell in June, fewer 1st-time buyers
http://news.yahoo.com/june-existing-home-sales-drop-cancellations-140353502.html
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High cancellations depress homes sales
http://news.yahoo.com/home-sales-fell-june-fewer-1st-time-buyers-140350718.html
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Existing Home Sales in June: 4.77 million SAAR, 9.5 months of supply

[mEDITate-OR:
assume that all existing homes, like all new homes, look and are alike.
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If you have been following Bill@CR, you will know that he is far more concerned, for the economy, by the lack of new homes - bcuz they mean new jobs.
What concerns him about existing home sales is that there is an unknown number of "hidden inventory" foreclosure homes - not yet foreclosed on, in foreclosure and REO held back homes - that simply have to clear the market for there to be any hope of a RE recovery.
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Some of U.S. believe that they must be a jobs recovery BEFORE there can ever be an existing homes recovery, and long before any new homes recovery.
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This week we have the NAR, and other reports, about existing homes
The 1st CR chart shows U.S. both the seasonality of existing home sales
AND the fact that we are not only behind the peak years, but last year too.
True, last year was inflated by the New Home Buyers Tax Credit.
but, that does not change the fact that home prices are down this year
a lot in many states - and double digit decline in Wa, OR and AZ
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What the 3rd, 4th and 6th charts show U.S. is the huge increase in inventory and months supply - both of which show seasonal upticks, and the fact that seasonal sales are NOT buying them.
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What the 5th chart shows U.S. is that while the seasonal price increases are slightly higher than the last two year, the seasonal low prices this winter were much lower than the prior two year.
A higher high after a much lower low.
What, precisely, does that tell U.S.
Probably nothing.
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Existing Home Sales in June: 4.77 million SAAR, 9.5 months of supply
http://www.calculatedriskblog.com/2011/07/existing-home-sales-in-june-477-million.html
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Existing Home Sales: Comments and NSA Graph
http://www.calculatedriskblog.com/2011/07/existing-home-sales-comments-and-nsa.html
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Existing Home Sales Report: June 2011
http://paper-money.blogspot.com/2011/07/existing-home-sales-report-june-2011.html
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New Residential Construction Report: June + Housing Starts increase + Mutli-family Starts and Completions = On Track for Record Low Housing Completions in 2011

[mEDITate-OR:
assume that this weeks housing numbers are simply that same old things...
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Most press reports scream out about the huge increase in new housing starts and sales.
Well, that is almost The Truth.
What DID increase, a LOT, was multi-unit starts.
Most press reports said that was for "condos".
Well, that as stupid, and wrong.
Most multi-unit starts and permits are for "apartments.
Due to the shortage of vacancies, and huge rent increases.
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What PE and CR do much better than almost everyone else is skip the hype
and try to show U.S. the truth about  what is really going on.
After my suggestions to Bill@CR, not necessarily bcuz of them, he has split single units from multi-units for both permits and starts.
Bcuz multi-units are both very seasonal, very volitile and also much smaller than single units, they severely distort the single unit numbers.
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When, not if, you read Bill's comments, you will see that he believes that their not only is beginning to be, but will continue to be for a couple of years, huge increases in multi-unit starts.
However, he also believes that there was a huge overbuilding during the bubble.
Not consistent.
What we are now seeing is a huge number of people living in foreclosures who are not paying rent or their mortgage payments. Those homes are not "vacant", yet.
To assume that they will, when forced out, move into an "apartment", is misguided. Why? Bcuz someone will move INTO the same homes that they vacate. Not them, but down the street is the exact same home, renting and selling for a fraction of the price they would have been paying - if they were still paying.
To assume that is not where they will move is presumptuous, in the extreme.
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Housing Units added to Stock (000s)
	2005	2006	2007	2008	2009	2010	2011 (1st Half pace)
1 to 4 Units	1,673.4	1,695.3	1,249.8	842.5	534.6	505.2	437.0
5+ Units	258.0	284.2	253.0	277.2	259.8	146.5	119.0
Manufactured Homes	146.8	117.3	95.7	81.9	49.8	50	46
Sub-Total	2,078.2	2,096.8	1,598.5	1,201.6	844.2	701.7	602.0
Scrappage	200	200	200	200	150	150	150
Total added to Stock	1,878.2	1,896.8	1,398.5	1,001.6	694.2	551.7	452.0

The key points are:

1) there will be record low number of completions this year, and 
2) that means a record low number of housing units added to the stock, and
3) that means the excess vacant inventory is declining.
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PE:
New Residential Construction Report: June
http://paper-money.blogspot.com/2011/07/new-residential-construction-report.html
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CR charts: Housing Starts increase
http://www.calculatedriskblog.com/2011/07/housing-starts-increase-in-june.html
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Mutli-family Starts and Completions
http://www.calculatedriskblog.com/2011/07/mutli-family-starts-and-completions.html
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On Track for Record Low Housing Completions in 2011
http://www.calculatedriskblog.com/2011/07/on-track-for-record-low-housing.html
========

Unemployment: Initial, Continued and Extended UI Claims July 21

[mEDITate-OR:

wonder not at the differences between RTT and Bill@CR's views...

and those of the Paper Economy

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If the fact that not much changed is too busy for you...

take a long hard look at what is NOT happening.

Nothing.

And, THAT is The Problem.

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Unemployment: Initial, Continued and Extended UI Claims July 21

http://paper-money.blogspot.com/2011/07/extended-unemployment-initial-continued_21.html

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It's the economy, not the debt, stupid + Layoffs climb amid a raft of worries

[mEDITate-OR:
not realize that "They" are working...
on solving a problem that is caused by you're NOT working...
and with a "solution" that will cause even more of US. to be not working.
As GE oft told U.S. = Progress is our most important product.
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except when we aren't makin' any progress.
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It's the economy, not the debt, stupid
http://lifeinc.today.com/_news/2011/07/20/7124170-its-the-economy-not-the-debt-stupid
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Layoffs climb amid a raft of worries
http://www.msnbc.msn.com/id/43838625/ns/business-stocks_and_economy/#
=========

Weekly Initial Unemployment Claims increase BACK UP to 418,000

[mEDITate-OR:
not even see that you are seeing something new...
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From W and 9-11 things looked like they were getting better
but at the end, finally, of W, the wheels came off.
And, BO has not, and will not, fix it.
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Of course, the Bad News is that new claims are back up...
and still up over 400K for the 15th week...!!!
The REAL Bad News is that UI claims prove that this IS an "L" shaped
or a non-jobs recovery, non-economic recovery.
The worst of both worlds - for U.S.
Wonderful profits for companies, lousy income for the rest of U.S.
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The Good News is that Bill@CR is now showing U.S. a more targeted
as in more narrow view of the UI numbers.
While Bill's "long form" charts are as good as they get, or the best available
they often do not show U.S. the "micro" economic view we need
to fully understand the MACRO economic movement that we also need.
What Bill did, for a short while, was put a small insert into his larger graph
that showed U.S. the "narrow view" of the current volatility.
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What Bill shows U.S. this time is the extreme NON-volatility.
That IS what an "L" shaped recovery is.
Youse guys ain't goin no where, fast, see...???
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Weekly Initial Unemployment Claims increase to 418,000
http://www.calculatedriskblog.com/2011/07/weekly-initial-unemployment-claims_21.html
============