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By New_Deal_democrat November 19, 2014 1:45 pm
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Best housing permits in nearly 7 years all but take recession off the table for US in 2015

This morning's report of October housing permits may be the single best piece of economic news of the year.

Why?  Because housing permits are probably the single most important point of data forecasting the next 12 months.  And housing permits made a new post-recession high - in fact the best showing since January 2008.

Here is the long view of housing permits for the last 50 years (red) and single family housing permits :(blue):

You simply do not get an economic contraction without housing permits having gone down for at least a year.  Even before the 2000 recession, permits had declined by -175,000 from their recent peak before that recession hit.

Note that the difference between the 2 lines is the level of permits for multi-unit construction. As interest rates rose in the 1960s and 1970s, more condos and apartments were built.  This is also when the Baby Boomers hit the market.  Now we see the same phenomenon with Millennials.  Here's a close-up of the last 5 years:

As interest rates rose sharply beginning in mid 2013, housing permits went flat.  With somewhat lower interest rates since the beginning of this year, the market has bottomed and has picked up modestly.  That's what is shown in the final graph, which is the YoY change, in thousands of housing permits:

The trend bottomed at the end of last winter, and has modestly increased on a YoY basis in the months since.

This doesn't mean the economy finally achieves lift-off in 2015.  But it pretty much takes contraction of the table for the US economy.

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