Housing Permits Grow for First Time since July

November’s modest month-over-month growth in housing permits will not be enough to prevent further decelerating growth in the annual rate of change.

There were 101,700 housing permits filed in November 2018. While this was the second month in a row with more than 100,000 permits, November’s total was the second lowest since February 2018. Compared with one year ago, November’s permits increased 4.8 percent, which broke string of three straight months of contraction. However, the annual rate of growth decelerated for the second month in a row to 4.6 percent. This was the slowest rate of annual growth since May 2017.

In November, the year-over-year change in the 10-year Treasury rate was 41 basis points for the third month in a row, the the 10-year Treasury rate was relatively unchanged. With the Federal Reserve not raising rates at its last meeting and President Trump harping on the Federal Reserve for raising rates, could the rise in the year-over-year change in the 10-year Treasury rate be over? We will probably need a few more months to know the answer to that. 

Changes in the real 10-year Treasury rate tend to lead capital equipment consumption by a relatively long period of time – historically, 12 to 18 months. 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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