Housing Permits Up 6.8% from December 2013

According to the Census Bureau, there were 80,600 housing permits filed in December 2014. This was an increase of 6.8% compared to one year ago. This was the second time in three months that the month-over-month rate of change increased by 6.8%. And, the month-over-month rate of change grew for the sixth time in seven months. The annual rate of change continued to decelerate, which is a negative sign for future capital spending. The annual rate of change is growing at its slowest rate since January 2012. However, current housing permit data trends indicate that the annual rate of change should bottom out soon.

Also, the 10-year treasury rate is indicating that housing permits should see accelerating growth very soon. 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 five months. Since changes in the interest rate lead changes in housing permits and construction spending by about 12 months on average, we should expect to see the rate of growth in housing permits to bottom our soon (everything else being equal of course).

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.