Updates
Later, 4:26 p.m. CT: Home Depot posts 4Q21 earnings; tops forecast.
Later, 4: 21 p.m. CT: see first comment.
Later, 12:01 p.m. CT: this is quite remarkable. I posted the original post earlier this morning. Now, I note that Home Depot announced that it raised its dividend -- and raised it considerably! Link here. Dividend history here. Previous quarterly dividend was $1.65. New dividend, $1.90, record date, 3/10/22 and payable date 3/24/22. That's a 15% jump in the quarterly dividend.
Original Post
US new housing starts, link here.
The problem with Rick Santelli, CNBC when he reports this data, he never shows the graph. His data is simply month-over-over, with revision, with perhaps a short historical context. Like monthly rig counts, monthly new housing starts is background noise. It's the long-term trend.
New houses, unlike existing house sales, drives durable goods -- washers, dryers, EV outlets in garages, solar panels, furniture, entertainment centers, and sleep-number beds -- and durable goods drive trucking and trains.
I will even hazard a guess that many new houses come with a new car these days.
And how much of this is driven by post-Covid, geographical moves -- from high-tax, mask-mandated-crazy states to less restrictive, lower tax states? And with high heating costs in New England, how many folks moving to states with low-energy costs? And it's the folks with income that can afford to move. Low income and low-middle income -- the folks that don't pay much in state taxes -- cannot afford to move.
Look at that jump pre-Covid -- no one predicted Covid -- and yet, that spike just prior to 2020 is quite remarkable. Never discussed, never explained but that's certainly eye-catching.
Then, of course, we have the debacle that was Covid -- but the slump did not last long and within six months or so the curve was back to where it was pre-Covid. The question is: to what extent are housebuilders still playing catch up?
My hunch: the corresponding graph for Germany, France, and Great Britain looks nothing like this graph. Let's check:
One word: recession.
France. If you check out France, be sure to expand the graph to ten years.
interesting back story on housing starts...starting this month, the Census is now using satellite images and AI to determine when houses get started…you can read about that here:
ReplyDeletehttps://www.census.gov/library/stories/2022/02/census-bureau-construction-data-from-stone-age-to-space-age.html?utm_campaign=20220208msacos1ccstors&utm_medium=email&utm_source=govdelivery
one reason i never spent much time covering this report, or the new home sales report that follows, is the sketchy data and large margin of error…to gather the data on starts and permits, Census agents visit less than 1% of US permit offices each month and record new data on their laptops….in non permitting areas, Census agents drive around looking for signs of new construction, and when they find it, ask the builders on location for the details…the satellite images should vastly improve on that method of data gathering…
because they lack the personnel to gather a reasonable sample of data, these reports come with a large margin of error, and subsequent revisions.. here’s how i described the data on housing starts for this week’s report:
the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,638,000, which was 4.1 percent (±13.7 percent)* below the revised December estimated annual rate of 1,708,000, but was 0.8 percent (±12.5 percent)* above last January’s rate of 1,617,000 housing starts annually….the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month, or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January’s housing starts could have been up by 9.6% or down by as much as 17.8% from those of December, with revisions of a greater magnitude in either direction possible later…
source: https://www.census.gov/construction/nrc/pdf/newresconst.pdf
Thank you. Much appreciated. Home Depot earnings 4Q21 just posted.
Deletehttps://themilliondollarway.blogspot.com/2022/02/home-depot-4q21-earnings-topped.html
Thinking back on the accuracy of "new home starts...." This is pretty funny. I'm posting the daily activity report not and if one thinks the US can't keep track of new housing starts, shoot, the NDIC can't even get the number of active oil and gas rigs in North Dakota correct. And we're only talking about 33 rigs plus / minus 33, I suppose.
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