Housing is going gangbusters. Let's discuss why.

Homebuilders the Biggest Beneficiary

Homebuilders remain the biggest beneficiary of Covid-19 thanks to the Fed's reaction to it. 

Housing starts, permits, and completions crashed in the initial months of the pandemic, but the Fed goosed housing with a commitment to hold interest rates low until they spot their measure of inflation.

The Census Bureau's New Residential Construction Report highlights the details. 

Building Permits 

• Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,766,000. 
• This is 2.7 percent above the revised February rate of 1,720,000 and is 30.2 percent above the March 2020 rate of 1,356,000. 
• Single-family authorizations in March were at a rate of 1,199,000; this is 4.6 percent above the revised February figure of 1,146,000.
• Authorizations of units in buildings with five units or more were at a rate of 508,000 in March. 

Housing Starts 

• Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000. 
• This is 19.4 percent above the revised February estimate of 1,457,000 and is 37.0 percent above the March 2020 rate of 1,269,000. 
• Single-family housing starts in March were at a rate of 1,238,000; this is 15.3 percent above the revised February figure of 1,074,000. 
• The March rate for units in buildings with five units or more was 477,000. 

Housing Completions

• Privately-owned housing completions in March were at a seasonally adjusted annual rate of 1,580,000. 
• This is 16.6 percent above the revised February estimate of 1,355,000 and is 23.4 percent above the March 2020 rate of 1,280,000. 
• Single-family housing completions in March were at a rate of 1,099,000; this is 5.3 percent above the revised February rate of 1,044,000. 
• The March rate for units in buildings with five units or more was 476,000.

Starts and Permits Shatter Expectations

• The Econoday consensus was 1.620 million starts at a Seasonally-Adjusted Annualized Rate (SAAR) vs the reported 1.739 million starts.
• The Econoday consensus was 1.750 million permits at a Seasonally-Adjusted Annualized Rate (SAAR) vs the reported 1.766 million starts.

Median Sales Price of New Homes 

Median prices are not the best measure of price because size and quality are not factors. Instead, let's look at resales of the same house.

No Inflation?!

The Fed does not count any of this as "inflation".

The Fed woodenly sticks to a definition of "inflation" that does not count home prices and dramatically undercounts the cost of medical care.

Easy Money Quote of the Day: Fed "Won't Take the Punch Bowl Away"

On March 25, I noted the Easy Money Quote of the Day: Fed "Won't Take the Punch Bowl Away"

Hello Fed, Inflation is Rampant and Obvious

For discussion of what's happening and how the Fed is purposely ignoring bubbles, please see Hello Fed, Inflation is Rampant and Obvious, Why Can't You See It?

Bubbles pop, however. The backside will be another Fed-sponsored disaster.