Based on permits, Econoday called today's housing report “very solid”. Let's investigate the claim with pictures.
Blame the Weather
Earlier today I reported, Housing Starts Unexpected Dive 8.2%: Economists Blame the Weather.
Econoday made this claim: “Starts can be affected by weather which along with related adjustments are always factors for this reading in the winter months.”
It's amusing how economists never seem to know what the weather “was” until economic reports come out a month later.
“Very Solid Report”
What really caught my eye was Econoday's opening gambit.
“A surprising but perhaps one-time drop in single-family starts masks what is otherwise a very solid housing starts and permits report for December. … But the backlog behind future starts continues to build as permits came in very strong, virtually steady at a 1.302 million rate and showing a noticeable 1.8 percent gain for single-family permits to 881,000.”
Leading Indicators
Permits a “Backlog of Future Starts”
Let's investigate the claim in pictures.
Starts vs Permits
Starts vs. Permits Synopsis
Starts vs. Permits – Percent Change from Year Ago
Although permits are required to do a start, permits do not represent a “backlog behind future starts“.
In fact, year-over-year spikes in permits tend to be a lagging indicator.
