Housing Permits Zoom in June
There were 134,800 housing permits filed in June 2015. This was the most housing permits filed in a single month since June 2007. This was an increase of 40.9 percent compared with one year ago, which was the fastest rate of month-over-month growth since April 2013. This was the sixth time in seven months that the month-over-month rate of growth exceeded 5.8 percent. The annual rate of growth accelerated to 10.4 percent from 7.6 percent. This was the second month in a row of accelerating annual growth. The annual rate of change is poised for further acceleration in the next couple of months. This is positive for the plastics industry in particular. However, a significant reason for the large increase in housing permits in June was permits for buildings with five or more units (read: apartments). This may not be as beneficial to the overall economy as if a new homes were the bulk of the increase.
However, the 10-year treasury rate has begun a trend of rising rates compared with one year ago. This indicates that housing permits could see their peak rate of growth later this year. 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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