Thursday, September 17, 2015

Housing permits: in which I have a bone to pick with the Census Bureau

 -  by New Deal democrat

When you make a revision of over 25% to one month's data, that turns a surge into a crater, but the non-seasonally adjusted data still shows a surge -- such that the YoY data, which ought to be unaffected by seasonal adjustments, is out of whack by 35% (!!!), don't you think you owe your readers an explanation?

Well, Census Bureau, I"m looking at you.

Here's what housing permits (red) and starts (blue) looked like one month ago:

Permits had spiked to over 1.3 million in June, which was due, we were told, to the expiration of a program in NYC that required permits to be issued no later than June 30.

Now here is the same graph updated with this morning's data:

The spike in seasonally adjusted permits is completely gone, replaced by a crater.  This is no small revision. Rather, housing permits for June have just been revised down by 25% -- a full quarter of the total!  That's one heckuva revision!

How unusual is this big a revision?  Well, here's a comparison of the numbers through last month, with the revised numbers through this month:

Like I said, that's one heckuva revision!

OK, revisions happen.  Fair enough. But notice that starts -- an actual, physical event -- still reflect a significant increase in the last few months. It's one thing if permits were never acted upon with actual starts, but here we have suddenly non-existent permits leading to actual starts!

What's more, the summer surge in permits still shows up in the revised non-seasonally adjusted data:

Since, presumably, the issue here is a seasonal adjustment, the discrepancy ought to disappear if we compare YoY data. Umm, not quite:

The wholesale deletion of the NYC permits has created a 30% discrepancy in the YoY comparisons of seasonally adjusted vs. non-seasonally adjusted data!

Considering housing permits is perhaps the single most important long leading indicator, and with the revisions this morning completely wiping out any progress since last fall, it seems to me that the Census Bureau has some explaining to do. I have looked in vain for any explanatory note in this morning's release.  It's possible I missed it, of course, but at least one other blogger has confirmed to me that they did not see any such note either. 

So excuse me, Census Bureau, but I have a bone to pick with you.