Guess housing starts, guess recovery

Residential construction will likely pull the Gulf Coast region out of the recession, so the monthly national housing-start estimates are a closely watched economic indicator.

But as Metrostudy Chief Economist Bradley Hunter points out, the government's housing start numbers could be off — way off.

Take the recently announced August housing-start numbers for privately owned homes, which the U.S. Census Bureau says jumped 10.5% over July's estimate of 541,000. On the surface, this is terrific news.

But here's the problem identified in the footnotes of the Census news release: The estimate could be off by as much as 11.9 percentage points in either direction. So, it's possible that housing starts in August could have fallen by -1.4% or risen by 22.4% over July's figures.

The same news release says the 4.3% increase in single-family housing starts could be off by plus or minus 12.4 percentage points in August compared with July. So they could be as bad as -8.1% or as good as 16.7%. Take your pick.

Before you give up on government numbers completely, bureaucrats in Washington say they have a pretty good track record when it comes to housing starts. On average, preliminary housing-start estimates are only revised later by about 2% or less each month.