The closely aligned components of Building Permits and Housing Starts confirmed a new downward trend in May. Building Permits peaked in March, while Housing Starts peaked a month later in April. Today the Census Bureau reported that both components are not headed lower, with Permits down by 8.1% from the year before, and Housing Starts down an incredible 15.3% from last year.
The magnitude of these declines indicates that this move lower has some real momentum behind it and is likely to see a substantial follow-through in the coming months.
Real Estate is one of the most interest rate-sensitive sectors in the economy and is reacting to the Federal Reserves High-Interest Rate Policy.
Semiannual Housing Starts (blue, left scale), Semiannual Building Permits (red, right scale)
Reference: https://www.census.gov/construction/nrc/pdf/newresconst.pdf
