This happens at least a few times a year. Housing starts, permits and/or completions ‘unexpectedly’ drop. A million articles are written about why this is the end of the housing boom. A few months pass and they are all proven wrong.
Obvious questions are, who is being polled that it was unexpected? The answer is economist.
There are two laws about economist.
The First Law of Economists: For every economist, there exists an equal and opposite economist.
The Second Law of Economists: They’re both wrong.
So housing starts unexpectedly plunged 12.3% in June.
Here are the details for those interested via census.gov.
Below is a long term perspective of these data points.
These numbers are no where near the absurd height of 2005-06. They are right at the median of the past five decades.
Below is a zoom in from 2009 to today on the same data points.
There is nothing to be said about these ‘unexpected’ plunges. It could just be statistical noise. It has happened many times since 2009. Looking at the bigger picture, we see that the trend is up.
Further, the world is far more complex than a econometric model. Actually, econometric models are useless. I don’t have an answer for this “plunge”. Neither does any one else. It could just be as simple as the price of lumber making all time highs.
It could be a million other factors no one has thought about.
The flashing indicators showing that a recession is imminent are not there. The doomsday websites have been calling for a recession since 2011. They have missed the boat on the greatest bull market ever. One day they will be proven right just as a broken clock is right twice per day.
In the mean time ignore the noise.