US housing starts

Housing starts are a very reliable leading indicator for the US economy.  They fell by 4.5% in January, and the trend is firmly down.  However, they are still some way above the GFC 2008/9 lows.  These data point to a recession, though not (yet) one as deep as the GFC.

Source: Trading Economics

US Housing permits slow

In the USA, statistics for both housing starts and housing permits are calculated.  On the whole, housing permits are perhaps slightly the better indicator, because starts will be affected by the weather, while the number of permits issued will not, plus permits have a slightly better lead, because obviously a permit has to be obtained before construction can start.  Housing permits issued are falling, though not precipitously.  But they have been falling since early 2018.  Given that the long-term mortgage rate has been falling for months (it started rising in July), one would have expected housing starts to pick up not fall.  

Interesting—an indicator of consumer and investor uncertainty about the longer-term eco picture.

US Housing starts up.

I said a coupla weeks ago here and here that it looked as if housing was finally starting to recover in the US. The June housing starts number (out on Thursday US time) was better than expected and, what was as significant, previous months' data were revised up, always a sign of a strengthening economy.

Starts have a long way to go before they reach even the recession lows of previous cycles, and remember, the US population has grown substantially over the last 30 years.  Nevertheless, they've started a sustained rise.  Now, housing construction is a small part of the economy, but it fluctuates a lot and so it can contribute a much larger percentage of the actual swing in overall output and incomes.  Also, when peopl buy new houses, they also tend to buy new white goods, curtains, and other semi-durable goods.  House prices have stopped falling, and may even be rising slowly; the mortgage rate is at decadal lows; housing starts are rising.  A virtuous circle which will help support the economy.  Alas, it needs this support: my coinciding index is flat, retail sales and employment are flat or barely growing, Europe is cactus, and China is only just really now putting the pedal to the metal.

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