Housing Permits Grow for First Time in 2019

The falling change in the real 10-year Treasury rate led to the first month-over-month increase in housing permits of 2019 in July.

There were 118,800 housing permits filed in July 2019. This was the fifth consecutive month with more than 105,000 permits filed, and it was the second-most housing permits filed since June 2018. Additionally, the month-over-month change in permits increased for the first time since December 2018, growing 5.1% compared with one year ago.

The annual rate of change contracted at an accelerating rate for the third month in a row, slowing to 1.8%. That’s the fastest rate of contraction in housing permits since September 2011, and it is likely to change in the next couple of months if the month-over-month rate of change continues to grow.

The 10-year Treasury rate is indicating that this should happen. In July, the year-over-year change in the real 10-year Treasury rate was -0.46%, which was the first time in nine months that the change increased. However, the change remained below zero for the seventh consecutive month, a positive sign for housing.

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 should lead to increases in these data points down the line.

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