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By New_Deal_democrat August 16, 2017 12:19 pm
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July housing permits and starts continue to fail to make new highs
As of last month, neither permits nor starts had made new highs since winter, and it was sufficient to tip the scales in how I look at the long leading indicators, from positive to neutral.
Today's report for July showed that both permits and starts pulled back somewhat from June, but June was even stronger than originally reported, although not a new expansion high. But neither June nor July were above the expansion highs of last autumn and winter.
Let's take a closer look.
First, here are permits:
The peak in 2015 is due to an NYC distortion, but more importantly permits remain below their levels from the early months of this year.
Here is the chart for starts, which are considerably more volatile but represent "hard" economic activity:
The last 4 months all have been lower than last October, December, January, and February.  As a result, the three month moving average, which smooths out much of the volatility, has not made a new high in 5 months.
Here is the YoY graph for both starts and permits:
Starts are actually down YoY, while the less volatile permits are tracing a line similar to their slow YoY improvement in 2014, the last time mortgage interest rates were higher YoY.
Finally, here are single family permits, which are equally leading but are the least volatile of the measures:
These have also not made a new high in 5 months, although on a YoY basis, due to a weak comparison from 12 months ago, the YoY measure (not shown) improved this month. 
The bottom line is that housing remains a neutral, with a real but relatively small turndown since last winter.  Because interest rates are still elevated YoY, I expect housing to remain neutral or negative for the next few months, in the face of some increasingly challenging comparisons.
As an aside, there has been some interesting data on apartment and condo construction recently.  That will be the subject of another post.

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