Positive July housing permits and starts

Positive July housing permits and starts

The housing starts and permits report this morning for July adds to the positive data looking forward to H2 2020 (or, possibly, less bad – but that’s another discussion).

First, here are overall permits (red) and starts (blue):

While the very volatile starts declined, the slightly more forward looking and less volatile permits rebounded off their low to a 6 month high.

The less volatile single family permits (red) and starts (blue) were even more positive:

Single family starts were at an 8 month high. The more forward looking and least volatile single family permits made a 9 month high.
Lower interest rates are now clearly feeding into the housing construction market. This is a positive 12+ months out.
There are two issues. The first is whether house prices advance so quickly that they eat up the savings purchasers would otherwise pocket. This is the “housing choke collar” theory I have recently advanced. The second is that this in no way negatives the potential for a recession this winter, much as the advance in housing in 2000-01 did not prevent the 2001 producer led recession.