Re: Housing Starts Jump in April

I-Man — Sat, 17 May 2008 13:36:36 -0000

From TheBigPcture blog, economist Barry Ritzholtz succinctly shows how meaningless this 8.2% figure is.

HOUSING STARTS
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,032,000. This is 8.2 percent (±14.5%)* above the revised March estimate of 954,000, but is 30.6 percent (±6.7%) below the revised April 2007 rate of 1,487,000.

As is so often the case, the devil is in the details:

As far as the April Hosuing Starts go, a monthly change (seasonally adjusted annual rate) was 8.2%, versus an estimated relative standard error of ±14.5%. Hence, the monthly change is not statistically significant; that is, it is uncertain whether there was an increase or decrease in Housing Starts from March to April.

As to the 30.6% year over year drop -- that is ±6.7% -- and therefore is statistically significant.

In other words, MSM headlines (as usual) give a misleading impression.

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Re: Housing Starts Jump in April