Paulson's Cherrypicked Housing Stats Give False Hope Of Upturn

If New York Times economist Floyd Norris ever gets sick of working for a company whose stock always goes down, he should head for Wall Street, where companies’ stocks always go…never mind. (He’s good, is what we’re saying).

In any event, Norris dissects the bogus housing-market optimism Treasury secretary Hank Paulson shoveled out yesterday--and is gracious enough not to note that Paulson is smart enough to know exactly what he was doing:

Henry Paulson yesterday pointed to the few signs there are of improvement in the housing market…One statistic he cited particularly struck me as whistling past the graveyard:

“We are working through the excess new home inventory – the inventory of new single family homes is down 21 per cent from its 2006 peak.”

Well, actually… The statistic he relied upon includes new homes that builders are offering for sale even though construction has not even begun. Those homes are typically in new subdivisions, and there are not very many of them these days. The number of unstarted new homes being offered is down 36 per cent since June 2006, the month the overall figure he points to hit its peak. Part of that decline came because builders dropped plans to build, not because buyers appeared…

The inventory of new homes that have been completed and are available for sale is up 35 per cent. In June 2006, there were 135,000 such homes. This May, the latest figure available, there were 182,000 such homes.

And the median age of those completed but unsold homes has gone up 136 per cent over that period, from 3.6 months to 8.5 months. That later figure is the highest since the government started keeping that statistic. Some of those homes are in subdivisions where foreclosures are already climbing, and may be hard to unload at any price.

The actual number of completed but unsold new homes peaked in January at 199,000 homes, and is now down 9 per cent. Unfortunately, sales of such homes are slower than ever, relative to the inventory. May was the first month ever that sales of completed new homes totalled less than 10 per cent of the number of such homes that had been available for sale at the beginning of the month.

Any response, Hank?

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