Housing Starts as a whole reportedly fell 9% last month to an annualized 1.047 million units under construction across the country. Single family dwellings, which account for the majority of residential construction actually advanced 8.1%. Yet despite the surge in new homes happening right now, the 1.047 million units is the lowest in the last year-and-a-half. So what gives? Here’s where it gets interesting. Let’s say that you are a real estate tycoon. Do you build little tiny homes for one happy family and their suburban dog to live in or do you go big?
The answer is that tycoons go “huuuuuuge”. They build multi-family units and lots of them. And then sometimes they don’t. They take a hiatus from their day jobs to procure other activities where they offend a lot of people and create a few enemies. And when they do, multi-family construction plummets 38% in one month. That–or something like it–is what dropped the housing number to the lowest level in the last 18 months. Don’t read too much into the headline. Building Permits (which will turn into next month’s Housing Starts) increased 6.3% to an annualized rate of 1.225 million, beating analysts expectations.
This is in no way a metaphor for anything other than housing. I am just not smart enough to construe a political analogy that sophisticated. I just report the numbers and try to make sense to them in an interesting way.