Single-Family Housing Starts Fall In January

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For the first time in more than 8 months, there’s a dent in the housing market.

Housing Starts Fall 1 Percent

According to the Census Bureau, Single-Family Housing Starts dropped 1 percent in January.

The annualized data measured 413,000 units last month, the report’s lowest reading in almost 2 years.

A “Housing Start” is defined as a home on which construction has started.

However, if you had only seen the Housing Starts story in the papers, you wouldn’t have thought that single-family starts fell at all — you would have thought they soared, actually.

It’s because of how the story is being reported.

Newspapers Make Misleading Statements

When you open a paper today, or head to Google, the headlines on Housing Starts are akin to “Housing Starts Jump 14.6%“, with the article’s lead paragraph making mention how “housing starts are at their highest levels in 4 years”.

These are true statements, to be sure. But, they’re also misleading.

See, although the Census Bureau splits Housing Starts data by property type — single-family homes, multi-family homes, and apartment buildings — the media takes all three and lumps them into a single data set.

That’s helpful to Wall Street and investors with an interest in homebuilder stocks, but it’s over very little value  for everyday home buyers like me and you. The majority of buyers aren’t buying multi-unit home or entire apartment buildings — they’re buying single-family properties such as detached homes and condos.

Broken down by home type, here’s how January’s Housing Starts fared:

• Single-Family Homes : Down 4,000 units annualized, or -1 percent
• 2-4 Unit Homes : Negligible change
• Apartment Buildings : Up 46,000 units annualized, or +80 percent

Clearly, January’s surge in Housing Starts is attributed to the rapid rise in the 5-unit-or-more sector. Single-Family Housing Starts were weak, by comparison.

Margin Of Error Casts Additional Doubt On Data

Even with all of this noted, though, we can’t be certain that the January Housing Starts data is even accurate anyway.

A footnote in the government’s report shows that, although single-family starts are said to have decreased 1 percent, the data’s margin of error is reported as ±8.6%.

This means that the true Single-Family Housing Starts reading may have been anywhere from -9.6% to +7.6%.

In other words, the data is throw-away. Housing Starts may have actually increased in January — we just can’t know until revisions are made later this year.

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(Post adapted from Bring the Blog, a blog-writing service for lenders and real estate agents)