Housing Starts? Census Bureau Reporting Reaches New Level Of Absurdity

Census Bureau definition of a housing “start:”   Start of construction occurs when excavation begins for the footings or foundation of a building.  Census Bureau

The Shadow of Truth did an interview with NY Post report John Crudele, who is the journalist who caught the Census Bureau fraudulently reporting employment data:  The Unemployment Rate In And Of Itself Is A Joke.

Crudele and the NY Post currently have six Freedom of Information Act requests with Census  Bureau, to which the CB refuses to respond or hand over documents.  Some of them are more than a  year old.  If the Census Bureau/Government does not have any foul play to hide, then why not respond the to the FOIA requests and dispel all doubt?

With this as the context, I think its safe to say that it is highly likely that the CB data with respect to housing starts is wildly inaccurate, especially in light of the collapsing price of lumber:

LumberCollapsing

In fact, when you examine the Census Bureau-generated “housing starts” number vs. the market price of lumber, the Census Bureau data has no credibility (source: Zerohedge, edits are mine):

20150519_starts2The fundamental economic data as measured by the market does not support the data being reported by the Census Bureau. If housing starts were flourishing, the demand for lumber from new homebuilders would be pushing the price of lumber higher.

Given that we know the Census Bureau has been fraudulently reporting employment data, it is highly probable that the Census Bureau’s data collection and reporting process with respect to housing starts and new home sales is corrupted.

As you can see from the way in which the Census Bureau defines a “housing start,” all that is required to be counted is basically any homebuilder sticking a shovel in the ground of a piece of property with an authorized building permit.   The CB has stated that if it can’t collect data on new home sales in certain regions, it will “estimate” the number of new home sales based on housing permits filed.  I would suggest the same absurd technique is utiltized with respect to “collecting” data on housing starts.

Regardless of whether the number reported today by the Census Bureau reflects any remote semblance of reality, if homebuilders are indeed building more homes, the result will be little more than the continued pile-up of homebuilder inventory.

In fact, as I’ve shown in my homebuilder research reports, new homebuilders have amassed a record level of inventory.  This inventory is piled on top of a unit sales run-rate that is roughly 1/3 the peak level of sales in 2005.

The question is, in the context of the rate of homeowership in ths country continuing to plunge to multi-decade lows, the continued lack of participation in home sales by the first-time buyer, and a massive pile-up on in high-end inventory, who in the hell is going to buy all of these supposed new homes being built?

6 thoughts on “Housing Starts? Census Bureau Reporting Reaches New Level Of Absurdity

  1. Dave,

    Your analysis is spot-on.
    However, trying to play in a rigged casino is a waste of currency.
    The scumbags in charge will not let anyone in know of the truth “win” in the markets in any meaningful way.
    BTW, Crudele’s assessment that it is OK for the “Fed” to rig the markets “sometimes” is an asinine statement.
    That is like saying, it OK for a casino to rig it’s games when it sees the need.

    Keep us the great work and stay the hell out of the stock market.

    End the Fed

  2. Misbehaving students are sent to detention. Unpleasant mortgage assets get shuffled off into “bad banks.”

    It is an option being considered by investment banks including, most recently, Lehman Brothers Holdings. A “bad bank” is a fairly simple strategy: a publicly traded financial institution–the “good bank”–bundles its troublesome loans or mortgages to create a separate company to liquidate the loans. The subsidiary is spun off to shareholders. Investors who can stomach the risk will profit if the loans are paid back. Bad banks usually need regulatory approval.

    http://blogs.wsj.com/deals/2008/09/02/lehman-brothers-and-a-brief-history-of-bad-banks/

    DEFINITION OF ‘ZOMBIE BANK’
    A bank or financial institution with negative net worth. Although zombie banks typically have a net worth below zero, they continue to operate as a result of government backings or bailouts that allow these banks to meet debt obligations and avoid bankruptcy. Zombie banks often have a large amount of nonperforming assets on their balance sheets, which make future earnings very unpredictable.

    http://www.investopedia.com/terms/z/zombie-bank.asp

    The FED is the ultimate bad zombie bank… and “we” are the “shareholders” (bagholders)…

    beep beep

  3. Dave, along with lumber that other vital construction material – copper, has been in a downtrend and has barely reached it’s nearest moving average, with a flat low monthly trading pattern. No current global demand. This also says something about the supply line being backed up, with too much product awaiting buyers.

  4. I am wondering whether the permanent rise of the stock markets (without any worth mentioning correction for a long period of time now) deserves to get the title: “Crack up boom”, in German we say: Katastrophenhausse!? I mean, in Weimar times, when you had a look on the German stock index, everything was in good shape. Rest is history. I have he dumb feeling that we currently do experience history again.

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