Housing Permit Growth Slowed Considerably in July

There were 100,900 housing permits filed in July 2015. This was the fourth month in a row with housing permits above 100,000. However, July's data was still below the historical average of monthly permits filed since 1964. Also, the month-over-month rate of change decelerated sharply to 3.9 percent. This was the slowest rate of growth since January 2015. While the annual rate of growth accelerated notably the previous two months, the annual rate of growth decelerated in July. Could the accelerating growth in permits have ended after just two months? 

The 10-year treasury rate has begun a trend of rising rates compared with one year ago. This indicates that housing permits could indeed have seen their peak rate of growth in July. If July is not the peak month, then the peak rate of growth will likely occur before the end of 2015 based on the trend in interest rates. 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.