Housing Permits Rate of Change at a Bottom?
There were 70,000 housing permits filed in January 2015. This was an increase of 4.2% compared with one year ago. The month-over-month rate of change is relatively low but it does seem to have stabilized and put in a bottom from which there will be accelerating growth. The annual rate of change accelerated for the first time since April 2013. There may not be reapidly accelerating growth in the annual rate of change, but it is poised to grow given the trend in interest rates.
Also, the 10-year treasury rate is indicating that housing permits should see further accelerating growth. The year-over-year change in the real 10-year treasury rate has been trending down since July 2013. In fact, the change in the real rate has been getting more negative for six months. Changes in the interest rate lead changes in housing permits and construction spending by about 12 months on average.
We use housing permits as an early leading indicator for the following industries: appliances; custom processors; furniture; hardware; HVAC; off-road/construction machinery; petrochemical processors; plastics; plastic/rubber products; pumps/valves/plumbing products; textiles/clothing/leather goods; and wood/paper products.
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