Tag Archives: Census Bureau

Census Bureau Remodeling Data Revisions Out of Sync with Other Market Indicators

Census Bureau Remodeling Data Revisions Out of Sync with Other Market Indicators

 by Abbe Will
Research Analyst
Since 2007, the Joint Center for Housing Studies has produced a quarterly Leading Indicator of Remodeling Activity (LIRA), which makes use of several economic indicators that historically have had strong correlations and leads over remodeling spending to anticipate near-term changes in the market. The Joint Center relies on the homeowner improvement expenditure data reported in the U.S. Census Bureau’s monthly Construction Spending Put in Place series (C-30) to estimate and benchmark its LIRA.
On July 1, the Census Bureau released its regularly scheduled annual revisions to the C-30, which adjusted the monthly improvement spending estimates back two calendar years to January 2011. As seen in Figure 1, these revisions increased estimates of home improvement spending by 6% for 2011 (from $114 billion to $121 billion) and decreased spending over 10% for 2012 (from $125 billion to $112 billion).

 LIRA

Source: US Census Bureau, Value of Private Construction Spending Put in Place (C-30).

Typically, these annual revisions are minimal and, in the past, changes were always in the same direction as the original estimates, often revising the whole series downward somewhat (Figure 2). This time, not only was the magnitude of the revisions significantly larger than in recent years, but the direction of the revisions was extremely divergent from what could have been expected based on previous annual revisions.

071713_lira_figure2

Source: US Census Bureau, Value of Private Construction Spending Put in Place (C-30).

Certainly, the extent of these revisions by itself calls for a thorough analysis and understanding of the reasons behind such dramatic changes, but the fact that the adjustments are at odds with other key industry data is even more worrisome. Figure 3 compares the annual rates of change in data series that historically correlate highly with home improvement spending (and are used as main inputs in the LIRA) with the pre- and post-revision C-30 data. As seen in the figure, key industry indicators including retail sales at building material and supply stores, remodeling contractor sentiment (RMI), pending home sales (PHSI) and single family housing starts all trended closely with the pre-revised C-30 estimates of homeowner improvement spending since January 2011.

 071713_lira_figure3
Sources: US Census Bureau, Value of Private Construction Spending Put in Place (C-30), Monthly Retail Trade Report and New Privately Owned Housing Units Started; National Association of Home Builders Remodeling Market Index (RMI); and National Association of Realtors© Pending Home Sales Index (PHSI).
At this time, there is no obvious explanation for why the revisions to the C-30 improvements data were so extreme this year. As part of the Joint Center’s investigation of this issue, we will be in contact with the federal agencies involved in collecting the survey data and developing these estimates to assess whether changes in survey methodology or weighting procedures, for example, might explain these large shifts. As the Joint Center reviews the underlying source data for home improvement spending and the procedures that generate these estimates, we have decided to forgo publication of the LIRA this quarter. The next LIRA is scheduled to be released on October 17, 2013.

 

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JCHS: A Word of Caution about Census Bureau Projections

A Word of Caution about Census Bureau Projections

 by George Masnick
The Census Bureau recently released its high and low immigration series population projections going out to 2060, complementing its middle series released in December 2012.  Among the talking points in the press release announcing the projections was the assertion that the high immigration series “projects that the U.S. resident population will become majority-minority by 2041, two years earlier than the December (middle series) projection of 2043.”The point is well taken that the growth of the minority population depends upon future levels of immigration, and higher immigration means an earlier date at which the country becomes majority-minority. But between now and the 2040s there is a great deal more uncertainty about immigration trends than is captured in the Census Bureau’s latest assumptions, including uncertainty about how attitudes and norms will affect who is counted as minority.  In addition, all three of the Census Bureau’s population projections use the same assumption about projected fertility levels of each race/Hispanic origin group.  Not only are fertility trends difficult to predict over many decades, but different immigration levels will surely affect fertility rates.

The new middle series immigration assumptions trend from 725,000 per year in 2012 to 1.2 million in 2050. Low assumptions trend from 702,000 to 808,000, and high assumptions from 747,000 to 1.6 million annually.  All three immigration assumptions are well below those of the previous Census Bureau population projections released in 2008 and 2009, with the new high immigration series even projecting fewer immigrants in 2050 than the previous low immigration assumption (Figure 1). Such a wide range of uncertainty about future levels of immigration should make one wary about the reliability of projections that reach almost 50 years into the future.

Source: U.S. Census Bureau 2009 National Population Projections

However, the projected level of immigration is not the only area of uncertainty that will affect the projected white-minority tipping point.  Predicting a specific year when the population actually becomes majority-minority sometime three decades ahead will also require assumptions about how Americans in the future will identify themselves in terms of race and ancestry.

Perhaps the most important wild card is the growing rate of inter-ethnic/race marriages, particularly when one parent is non-Hispanic white and the other is not, both because the rates of intermarriage will help determine the future minority composition of the population and because it is unclear how the children of such unions will be classified in future censuses and how they will self-identify as adults.  According to a Pew Research Center report, among all newlyweds in 2010, 9% of whites, 17% of blacks, 26% of Hispanics and 28% of Asians “married out.”  Most of these marriages involved one partner who was non-Hispanic white. The same report notes that during the past 25 years, public sentiment about inter-marriage has changed markedly: in 2010, nearly two-thirds of Americans said it “would be fine” with them if a member of their own family were to marry someone outside their own racial or ethnic group, while in 1986, two thirds of the population held the opposite view.  During the next 25 years, marrying out is likely to become even more common and more widely accepted.

Such trends in inter-marriage tell only part of the story regarding inter-racial childbearing, however. The percentage of births that are non-marital has been increasing steadily since the 1940s, and the greatest increases have taken place in recent years.  Today, 36 percent of all births taking place in the U.S. are non-marital, with much higher percentages among teens (86 percent) and women in their early 20s (62 percent). Given that younger cohorts are more favorably disposed to inter-racial relationships, many of which result in childbearing outside of marriage, the statistics on inter-marriages in the Pew report could well underestimate the implications for future inter-racial/ethnic childbearing.

The number of inter-marriage/partnerships taking place over the next 30 years, the number of children born to these relationships, and how the race/ethnicity of these children get classified in censuses and surveys will fundamentally affect the share of the population that is identified as minority.  More importantly, how these children will self-identify as adults in 2040 is basically unknown.  Census Bureau population projections tacitly assume that this variable is held constant at today’s levels, and that young adults will self-identify in the future the same way that they were identified as children by their parents.

A strong argument has been made that racial and ethnic identity is highly variable over time and depends upon social and political conditions. In 1970, the question on Hispanic origin was added to the Decennial Census, and in 1980 the question on ancestry, both after concerted political lobbying by Latinos in the case of the former and those of European descent for the latter.  The Asian community successfully lobbied to expand the number of Asian options listed in the 1990 census. However, since then the percentage of the population whose ancestry was not identified by the census has increased, slightly between 1980 and 1990, and dramatically between 1990 and 2000 (increasing from 11 percent to 20 percent).  In 2010 the ancestry question was shifted to the American Community Survey.  In that survey ancestry was unidentifiable or not reported for about 12 percent of the population, but only after a persistent effort with follow-up interviews with respondents having not answered this and other questions. Such follow-up was not conducted for the 2000 census.

In short, ancestry appears increasingly to be less important in how Americans identify themselves. And if ancestry, and perhaps by extension race and ethnicity, becomes less important in how we self-identify as Americans, it is entirely likely that in 30 years the percent minority will become a statistic that has become less robust.  Specifically, fewer persons of Hispanic origin might check that box. Likewise, fewer of mixed-race ancestry might identify as such.

A third way that the majority-minority tipping date might be influenced are the apparently arbitrary definitions of whom the Census Bureau counts as minority.  For example, immigrants from Brazil are not counted as minority (Hispanic/Latino) because of Portuguese ancestry, even though most Brazilians also have some indigenous South American native ancestry.  Persons with ancestry in the Middle East and in North Africa are also categorized as white. But a future OMB directive could require that these persons be counted as minorities.

Finally, it has already been demonstrated that such simple factors as questionnaire wording, order of asking questions about nativity, race and ethnicity, and examples used as prompts to questions, will all influence responses.  It is very unlikely that current questionnaire protocols for these items will be used decades in the future.

While there is a lot of uncertainty about the projections 30-50 years into the future, the new projections for the next 10-20 years are likely to be much more accurate.  And they are extremely valuable for showing the magnitude and importance of different immigration assumptions for relatively near-term trends in population growth and for broadly understanding the changing age, race and ethnic composition of the population. Longer-term trends in race and ethnic composition will depend as much on fertility levels, on rates of intermarriage, and on how we think about others and about ourselves, as it does on actual immigration trends.

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CR: New Home Sales at 454,000 SAAR in April

New Home Sales at 454,000 SAAR in April

by Bill McBride on 5/23/2013  

The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 454 thousand. This was up from 444 thousand SAAR in March (March sales were revised up from 417 thousand).

January sales were revised up from 445 thousand to 458 thousand, and February sales were revised up from 411 thousand to 429 thousand. Very strong upward revisions.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in April 2013 were at a seasonally adjusted annual rate of 454,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.3 percent above the revised March rate of 444,000 and is 29.0 percent above the April 2012 estimate of 352,000.”

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply was unchanged in April at 4.1 months.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of Supply This is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of April was 156,000. This represents a supply of 4.1 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is at a record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In April 2013 (red column), 45 thousand new homes were sold (NSA). Last year 34 thousand homes were sold in April. The high for April was 116 thousand in 2005, and the low for April was 30 thousand in 2011.

New Home Sales, NSA

This was well above expectations of 425,000 sales in April, and a solid report, especially with all the upward revision to previous months.  I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/05/new-home-sales-at-454000-saar-in-april.html#FsoeEkjKiPHxQ7ds.99

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CR: HVS: Q1 2013 Homeownership and Vacancy Rates

HVS: Q1 2013 Homeownership and Vacancy Rates

by Bill McBride on 4/30/2013 

The Census Bureau released the Housing Vacancies and Homeownership report for Q1 2013 this morning.

This report is frequently mentioned by analysts and the media to track the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn’t rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn’t use the HVS to estimate the excess vacant supply, or rely on the homeownership rate, except as a guide to the trend.

Homeownership Rate Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate decreased to 65.0%, down from 65.4% in Q4.

I’d put more weight on the decennial Census numbers and that suggests the actual homeownership rate is probably in the 64% to 65% range.

Homeowner Vacancy RateThe HVS homeowner vacancy rate was increased to 2.1% in Q1 from 1.9% in Q4.

The homeowner vacancy rate has peaked and is now generally declining, although it isn’t really clear what this means. Are these homes becoming rentals? Anyway – once again – this probably shows that the trend is down, but I wouldn’t rely on the absolute numbers.

Rental Vacancy RateThe rental vacancy rate declined in Q4 to 8.6%, from 8.7% in Q4.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the overall trend in the rental vacancy rate – and Reis reported that the rental vacancy rate has fallen to the lowest level since 2001.

The quarterly HVS is the most timely survey on households, but there are many questions about the accuracy of this survey. Unfortunately many analysts still use this survey to estimate the excess vacant supply. However this does suggest that the housing vacancy rates have declined sharply.

Read more at http://www.calculatedriskblog.com/2013/04/hvs-q1-2013-homeownership-and-vacancy.html#TkBWIoQoKuxIY0rc.99

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JCHS: A Surge in Hispanic Household Growth?

A Surge in Hispanic Household Growth? The Challenge of Interpreting Short-Term Trends in Datasets that are Occasionally Adjusted

Interpreting year-to-year changes in annual surveys from the Census Bureau can be a tricky business, especially around decennial censuses.  Because it is the largest and most comprehensive count of the population, after each new decennial census is released, the smaller but more frequently issued surveys available from the Census Bureau, such as the Current Population Survey (CPS), Housing Vacancy Survey (HVS) and American Housing Survey (AHS), are updated, or “re-benchmarked” based on the findings from the new decennial census.  Prior to this, these surveys were controlled to extrapolations based off of the prior decennial census. While it is inevitable that ten years of extrapolation can lead controls to drift off course, failing to recognize when and how datasets are re-benchmarked to correct for this drift can lead to misinterpretations about short-term trends.  The danger is that the re-benchmarking adjustment can be misinterpreted as an actual trend that occurred in a single month or year, rather than what it really is: a discontinuity in the data due to an adjustment made to correct the net sum of ten years of extrapolation errors that had accumulated in the dataset since the last decennial census.
Take for instance, the following data overview in a recent online article:“The latest U.S. census figures, for June, show year-over-year Hispanic homeownership increased by 7.3 percent, from 6.2 million to 6.7 million. For black-owned households during the same time, the numbers dipped by 1.3 percent, from 6.3 million to 6.2 million. Likewise, whites’ homeownership also saw a slight decrease of about 1 percent, from 58.4 million to 57.8 million.” – National Journal

On its face, this data leads us to conclude that the number of Hispanic homeowners surged from June 2011 to June 2012, while at the same time the number of homeowners among both blacks and whites dropped significantly, and therefore without growth in Hispanic homeownership the overall number of homeowners in the US would have dropped significantly over the past 12 months instead of growing slightly as was reported.
However, the Census Bureau’s Housing Vacancy Survey (HVS) showed that both Hispanic and non-Hispanic homeownership rates dropped during the June 2011 to June 2012 period, a time wherein Hispanics also suffered higher than average unemployment rates. At first glance, the divergence in the two reports is puzzling. However, on the Census Bureau’s HVS website, there is a short but significant sentence under the “Changes in 2012” section of the Source and Accuracy of Estimates web page:
 
“Beginning in the first quarter 2012, the population controls reflect the results of the 2010 decennial census.”  – HVS Source and Accuracy of Estimates
This note is important, because the distribution of occupied households by tenure, race, and ethnicity of households is based on these population controls.  Therefore, any changes in the number of homeowners by race and ethnicity that spans across the first quarter of 2012 is also incorporating change due to the shift in the distribution of households by age, race, and tenure that occurred with the re-benchmarking of the survey..
The adjustment to Hispanic households due to the re-benchmarking appears to be significant. Looking at the Hispanic share of households in HVS before and after Q1 of 2012, we can see that the re-benchmarking in that quarter led to a significant upwards adjustment that forms a discontinuity in this series (Figure 1).  The existence of a discontinuity is corroborated by data from the Current Population Survey, which re-benchmarked to the 2010 Census in 2011. The CPS Table Creator allows us to see the impact of the re-benchmarking directly by comparing the Hispanic share of households in 2011 under both 2000 and 2010 Census weights.  It shows that the 2010 census weights raise the Hispanic share of households a full percentage point, from 11 to 12 percent, compared to the 2000 census weights.  In short, this all suggests that results from the 2010 Census found that the 2000 Census-based population extrapolations had been underestimating Hispanic household growth in the 2000s, and therefore these household counts needed to be shifted upwards in 2012 as a correction.
Figure 1:  The Shift to 2010-Based Population Controls in Q1 of 2012 in the HVS Coincides with an Apparent Discontinuity in the Hispanic Share of Householders
 
 030713_mccue_figure1

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Survey data.

 
With the change in population controls in the HVS in Q1 of 2012, the amount to which the shift in the distribution of households towards Hispanic households was underestimated incrementally over the last ten years gets corrected all at once, and gets attributed as change measured between Q4 of 2011 and Q1 of 2012.  And as we see in Figure 2, the quarterly change recorded in Q1 of 2012 has a huge influence over our view of the recent trend in household and homeownership growth by Hispanic ethnicity.
Figure 2: Concurrent with the Switch to Census 2010-Based Population Controls, The First Quarter of 2012  Has a Large Influence on the Recent Trend in Hispanic and Non-Hispanic Household Growth 
 
030713_mccue_figure2
Source: JCHS Tabulations of the 1995-2011 AHS
Without the ability to compare alternative HVS household counts for Q1 of 2012 under both 2000- and 2010-based population controls, it is difficult to determine exactly how much of the change in Hispanic and non-Hispanic households and homeowners in 2011 to 2012 was due to the re-benchmarking and how much was due to actual change measurable in the survey.  We refrain from presenting alternative scenarios here, but because the quarter is such an outlier, most assumptions to smooth or discount that quarter of data would conclude with much lower Hispanic household and homeowner growth and much higher growth among non-Hispanics over the past year.
This post first  appeared on Housing Perspectives .
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CR: New Home Sales at 437,000 SAAR in January

New Home Sales at 437,000 SAAR in January

by Bill McBride on 2/26/2013 

NOTE: Federal Reserve Chairman Ben Bernanke testimony Testimony by Chairman Bernanke on the Semiannual Monetary Policy Report to the Congress

Here is the C-Span Link

On New Home Sales:

The Census Bureau reports New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 437 thousand. This was up from a revised 378 thousand SAAR in December (revised up from 369 thousand).

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

“Sales of new single-family houses in January 2013 were at a seasonally adjusted annual rate of 437,000 … This is 15.6 percent above the revised December rate of 378,000 and is 28.9 percent above the January 2012 estimate of 339,000.”

New Home SalesClick on graph for larger image in graph gallery.

The second graph shows New Home Months of Supply.

The months of supply decreased in January to 4.1 months from 4.8 months in December.

The all time record was 12.1 months of supply in January 2009.

New Home Sales, Months of SupplyThis is now in the normal range (less than 6 months supply is normal).

“The seasonally adjusted estimate of new houses for sale at the end of January was 150,000. This represents a supply of 4.1 months at the current sales rate.”

On inventory, according to the Census Bureau:

“A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted.”

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

New Home Sales, InventoryThis graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was just above the record low. The combined total of completed and under construction is also just above the record low.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In January 2013 (red column), 31 thousand new homes were sold (NSA). Last year only 23 thousand homes were sold in January. This was the ninth weakest January since this data has been tracked. The high for January was 92 thousand in 2005.

New Home Sales, NSA

This was above expectations of 381,000 sales in January. This is the strongest sales rate since 2008. This was another solid report. I’ll have more soon …

Read more at http://www.calculatedriskblog.com/2013/02/new-home-sales-at-437000-saar-in-january.html#JEGGhAuRiVj0wprP.99

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PragCap: Is the USA Facing a Housing Shortage?

Is the USA Facing a Housing Shortage?

02/25/2013

By Walter Kurtz, Sober Look

Homes available for sale as well as the housing supplies measured in months are now at pre-recession levels, while household formation continues to recover (see post). This development was predicted by William Wheaton back in 2009 (see figure 1).

Forbes: – Most striking however is the fact that inventory has contracted to its lowest level since December 1999, more than 13 years ago. The number of available homes, which is not seasonally adjusted, fell 4.9% from December and is 25.3% lower than a year ago. With 1.74 million homes on the market, at the current sales pace, supply will be exhausted in just over four months. It represents the lowest housing supply since April 2005. In a normal market, a healthy supply level is about six months.

A number of economists continue to talk about the shadow inventory – the millions of homes that are “about to hit the market” as homeowners have or shortly will fail on their mortgages. Some evidence suggests that in the more depressed housing areas banks are indeed sitting on foreclosed properties, unwilling to sell. But a number of banks have also been aggressively modifying mortgages, reducing principal and interest, and therefore cutting delinquencies.

Clearly many more homes will be hitting the markets this year. But it really doesn’t make much difference if people who move out of these homes end up buying or renting – they need to live somewhere. And according to the Census Bureau, rental vacancies are near a 10-year low.

Ironically, the relatively tight credit conditions are (at least partially) restricting new home construction. Completion of new housing units has improved recently but remains at historically depressed levels – certainly not enough to keep up with the population growth and family formation (see figure 2). The danger of course is that with spring approaching (generally a period of increased demand for homes), some markets could overheat due to tight supplies, worsening home affordability and dampening sales numbers.

sl11 Is the USA Facing a Housing Shortage?

(Figure 1 – Source: JPMorgan)

sl21 Is the USA Facing a Housing Shortage?

(Figure 2 – Source: NY Fed)

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