Housing Starts Decline as Completions Increase: A Recessionary Indicator

Discrepancy in Housing Starts and Completions

The gap between housing starts and completions is at its highest since 1980. This discrepancy is noteworthy because it's often associated with recessions. While the DotCom bust was not directly linked to housing, most recessions either affect housing or are caused by housing busts.

Single Family Housing Starts versus Completions

When looking at single-family housing, the data is not as alarming, but it's still not promising. The following chart provides a clearer perspective on the discrepancy.

Housing Starts and Completions

The chart below provides a detailed view of the difference between housing starts and completions.

The State of the Economy

Despite Fed Chair Jerome Powell's confident display during the FOMC press conference, questions arise about the strength of the economy. If the economy was as robust as Powell suggested, there would have been no need for the Fed to cut rates.

On September 19, it was reported that existing home sales had declined for the 24th time in 31 months. Compared to the previous year, sales are down 2.5 percent and down 39 percent from the high in January 2022.

Unemployment Claims Improvement: An Ominous Sign?

Another concerning factor is the rapid expiration of unemployment benefits, which could be a reason for the perceived improvement in continued unemployment claims.

Bottom Line

The discrepancy between housing starts and completions, coupled with declining home sales and the rapid expiration of unemployment benefits, paints a potentially recessionary picture. However, economic indicators can be complex and multifaceted. What are your thoughts on these trends? Do you think they signal a looming recession, or could other factors be at play? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, delivered to your inbox every day at 6pm.