As I wrote yesterday, the background longer term fundamental factors for the economy, most importantly all-time low interest rates, are very positive. In particular I wrote, this “has already made an impact on the housing market…Lower mortgage rates cause more people to buy houses. Housing permits have already made back about half of their pandemic losses as a result.”
Well, with this morning’s report on July housing permits and starts, I can amend that to read that housing permits [and starts] have now made back almost *all* of their pandemic losses.
To cut to the chase, here is a graph of the past 3 years of housing permits (blue), starts (green), and the least volatile of all the metrics, single family permits (red, right scale):
Permits are within 3% of their expansion highs from January and are only exceeded by that month plus October and November of 2019. Starts, which tend to lag permits by a month or so, and are much more volatile, are within 8% of their January expansion high, and above every other expansion reading except for November and December 2019. Single family permits were only exceeded in one month – this past February – during the last expansion, and are only 1.1% below that peak.
Since housing tends to help power the economy for the next 12 to 18 months, this is a very positive sign over the longer term once we have competent political leadership in Washington, and especially if a workable vaccine is available as well.