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Housing: a big miss in permits with important ramifications

Summary:
Housing: a big miss in permits with important ramifications NOTE: I’ll have a more comprehensive report up at Seeking Alpha later, and will link to it once it is posted. Despite a smart month over month increase in starts, this morning’s report on housing permits and starts, taken as a whole, was a sharp negative. It’s true that starts, both in total and for single family units only, were higher than their readings from the last two months. This is something that I forecast one month ago, because permits had had a couple of good months, and starts tend to follow permits with about a one month lag.  But they were below every other reading but one for this entire year. Permits were another story entirely.  Last month I said that I expected them to

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Housing: a big miss in permits with important ramifications


NOTE: I’ll have a more comprehensive report up at Seeking Alpha later, and will link to it once it is posted.

Despite a smart month over month increase in starts, this morning’s report on housing permits and starts, taken as a whole, was a sharp negative.

It’s true that starts, both in total and for single family units only, were higher than their readings from the last two months. This is something that I forecast one month ago, because permits had had a couple of good months, and starts tend to follow permits with about a one month lag.  But they were below every other reading but one for this entire year.

Permits were another story entirely.  Last month I said that I expected them to stagnate, based on higher mortgage rates this year.  They did even worse than that. Total permits came in at a 12 month low, and are down -5.7% YoY, and down -12% from their March high.  This is recession watch territory. The less volatile single family permits came in at an 11 month low. While they are still up +2.1% YoY, they are down more than -7% from their February high. This is also enough to turn this important long leading indicator negative, as we have gone 6 months without a new high and are down over -5%.

The data isn’t up on FRED yet, so here is the Census Bureau’s graph:

Housing: a big miss in permits with important ramifications

This, by the way, is in line with the recent weekly data on purchase mortgage applications, which has been running essentially flat YoY.

Bottom line: this is big news with important ramifications

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