Economic News Blog
Posted by: Steven Kline, Jr. 20. January 2014

Housing Permits Increase 15.1% in December 2013

According to the Census Bureau, there were 74,900 housing permits filed in December 2013. Housing permits grew at a rate of 15.1% compared to last December. This is the second fastest rate of growth in the last five months. However, the annual rate of change is down to 20.0%. The annual rate of growth has decelerated every month since April 2013.

In the current environment of zero interest rates from the Federal Reserve, the real Fed funds rate is a good leading indicator of housing permits. The change in the real Fed funds rate has been trending down year over year since April 2013. A continued decline in the year over year change in real interest rates would be positive for the housing market. However, unless inflation picks up, it will be difficult for the year over year change in the real Fed funds rate to move much lower after the first quarter of 2014. Therefore, it is likely that the rate of change in housing permits will continue to slow down in 2014

We use housing permits as an early leading indicator for the following industries: appliances; custom processorsfurniturehardwareHVACoff-road and construction machinery; petrochemical processorsplastics and rubberpumps, valves and plumbing products; textiles, cloting and leather goods; and wood and paper products. In general, housing permits are a very good leading indicator for the production of plastic product.

Comments are reviewed by moderators before they appear to ensure they meet Gardner Business Media’s submission guidelines.
blog comments powered by Disqus