Housing Permits Climb Above 100,000

With housing permits contracting for the fourth time in five months, the housing market is clearly slowing, perhaps indicating consumers feel tapped out.

There were 112,600 housing permits filed in October 2018 after falling below 100,000 permits in September. Despite climbing back above 100,000 permits, October permits contracted 1.2 percent compared with one year ago. That was third consecutive month of contraction, the fourth in five months. The annual rate of growth in housing permits has mostly decelerated since May, falling to its slowest rate of growth since May 2017. 

In October, the year-over-year change in the 10-year Treasury rate was 41 basis points. This was only slightly lower than the previous month, keeping the year-over-year change near its highest level since March 2016. The change in the 10-year rate is indicating an economic slow down may occur in 2019. An increasing year-over-year change in the real 10-year Treasury rate is negative for housing permits because mortgages become relatively more expensive. Changes in the interest rate typically lead changes in housing permits by 12-14 months.

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