Over at Wonkblog, Christopher Ingraham points us to new research from Ireland suggesting that an awful lot of people don’t know how much they paid for their houses. I’ve adapted the main chart from the study on the right. As you can see, most people who get this wrong underestimate how much they paid—sometimes by gigantic amounts. Very few people overestimate how much they paid, and virtually no one overestimates by more than a quarter or so.

What accounts for this? As it happens, the authors are mostly concerned with how this poor recall affects estimates of the wealth effect—which I admit I didn’t really understand.¹ Because of this focus, they don’t spend a lot of time speculating on the underlying causes. But they do mention that the older the loan, the less accurate people are; that younger people remember better than older people; and that errors are smaller among the well-educated.

But none of this explains why the bad recall is overwhelmingly on the low side. So here’s my guess: people lie. Or, more charitably, they’re in denial. They don’t want to admit to themselves or their friends how much they lost during the housing crash. Or, when prices are rising, they like to brag about how much they’ve made. Everyone else claims to have made a killing, so they slice a little bit off their buying price to make it seem like they made a killing too. No one wants to be a sucker, after all. Do this enough times, and eventually you come to believe it yourself.

http://www.motherjones.com/kevin-drum/2014/03/when-housing-prices-become-fish-stories-economy-suffers

Housing starts fell sharply in January for the second straight month as cold and stormy weather continued to batter the recovering housing market.

Starts of single-family houses and apartments fell 16% to a seasonally adjusted annual rate of 880,000 last month after declining dramatically in December, the Commerce Department said Wednesday.  Extreme winter weather is largely blamed for both poor showings after starts jumped to their highest level in a year in November.

Starts in December were revised up to an annual rate of 1.05 million from 990,000.

Economists had expected Commerce to report that starts fell to a 950,000 annual rate in January, according to their consensus estimate. Starts rose in the Northeast but declined in the rest of the country.

Applications — a gauge of future housing activity — fell 5.4% in January. Applications for permits to build single-family homes fell 1.3%.

The report follows this week’s release of a closely watched index of home builders’ outlook in February which declined at the fastest-ever pace and indicated that more builders view conditions as poor than good.

In a research note, UBS said the falling measure “suggests inclement weather probably depressed starts further in February.”

Other factors may also be at work, such as rising mortgage rates that have dampened home sales.

http://www.usatoday.com/story/money/business/2014/02/19/housing-starts-january/5587867/