Housing Permits Growing Faster for Two Months

There were 76,800 housing permits filed in February 2015. This was an increase of 8.8% compared with one year ago. This was the fastest month-over-month rate of change since September 2014. Housing permits seem to have bottomed as the annual rate of change has seen accelerating growth the last two months. That has not happened since October and November 2011. This is positive for the plastics industry in particular.

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.