The monthly statistics on housing permits and starts, reported this morning, were mixed, as permits increased slightly and starts declined:
The less volatile single-family permits also declined slightly.
On the one hand, a high level of construction activity is continuing. But the three-month moving average of both single-family and total permits, as well as starts, all declined from their highs in the December-January period. To be recessionary, I would need to see at least a 10% decline in total permits; the actual decline from the peak is about 6%, so well within the range of a little pullback during an expansion.
I’ll have more to say once the data is posted at FRED, probably later today.
UPDATE: Here is the comparison of single family permits (red, right scale) – the least volatile of the measures – with total permits (blue) and starts (green) – which are about twice as volatile as permits and typically lag by a month or so:
The December 2020 – January 2021 peak is evident.
And here is the YoY change in mortgage rates (red), inverted so that up = economic positive, and down = economic negative, compared with total permits (blue)/10 for scale:
As I have said many times before, mortgage rates lead permits and starts. The artifact of comparisons with the pandemic lockdown months will end in June, at which time I expect permits to be only about 5% ahead of summer 2020 (= .5% on the graph).