SURPRISE! The headlines on this morning housing numbers are misleading
So, I was cruising along in my car this morning as usual flipping back and forth between XM's CNBC simulcast and Bloomberg radio when at 8:30 AM the housing starts numbers came out. Here's how the scene played out:
They're much better than expected.
Hmmmmm, that doesn't sound right at all.
I'll have to look into what the real story is later on today.
Despite all of the headlines, including the NY Times' "Housing Starts Rise Unexpectedly, " the WSJ's "Housing Starts Post Surprise Rise" the housing starts numbers that the government published this morning weren't really all that pretty. CNN Money has the most accurate take on them in its article titled "Apartments key to home construction gain."
Yes, on the surface initial construction of "homes" in the United States did technically increase last month. However, the most important component of that number, single-family housing starts, dropped once again...to a 17-year low! Starts of single-family homes dropped 1.7% from March.
Anyone who believes that we are at the bottom of the housing market and that the economy is in such good shape that the Federal Reserve will be able begin raising interest rates by as early as November, as nearly half the people who are playing the Fed Funds Futures market do, are likely going to be in for a very rude awakening. The headline number looks better than many had anticipated as a result of gains in construction of multi-family homes, which increased 7.3% in April. The multi-family homes number is notoriously erratic and I wouldn't place much stock in its accuracy, let alone its importance.