5/19/2020 | 1 MINUTE READ

Housing Permits Fall Below 100,000 in April

There were 96,900 housing permits filed in April 2020. That was the first month below 100,000 permits since February 2019. Permits filed in April were down 18.4% compared with one year ago, which was the first month of contraction since June 2019. Also, this was the fastest rate of contraction since October 2009. In April, the annual rate of growth decelerated to 5.9%, which made it the eighth-straight month of growth.  

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -1.13%. This was the fourth consecutive month the real rate was negative. And, it was the lowest negative real rate since July 2012. The real rate would have been even lower except the inflation rate has fallen significantly (the real rate is the nominal rate minus the inflation rate). In April, the annual rate of inflation was just 0.33%, which was the lowest rate since October 2015. In April, the year-over-year change in the real rate was -140 basis points. The change was negative for the 16th month in a row. This was the lowest level for the year-over-change since July 2012. 

The change in the 10-year Treasury rate is a good leading indicator of housing permits and construction spending. A decreasing year-over-year change in the real 10-year Treasury rate typically leads to increases in these data points down the line. However, decreased economic activity from COVID-19 may prevent that this cycle.

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