Housing Permit Growth Explodes in May

There were 113,300 housing permits filed in May 2015. This was the most housing permits filed in a single month since August 2007. This was an increase of 20.8 percent compared with one year ago. This was the fifth time in six months that the month-over-month rate of growth exceeded 5.8 percent. The annual rate of growth accelerated to 7.8 percent from 5.5 percent. This was the first increase in the annual rate of growth since April 2013. 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, 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.