From


Census:

Building
Permits:

Privately‐owned
housing
units
authorized
by
building
permits
in
February
were
at
a
seasonally
adjusted
annual
rate
of
1,518,000.
This
is
1.9
percent
above
the
revised
January
rate
of
1,489,000
and
2.4
percent
above
the
February
2023
rate
of
1,482,000.

When
people
say
housing
leads
us
in
and
out
of
a
recession,
it
is
a
valid
premise
and
that
is
why
people
carefully
track
housing
permits.
However,
this
housing
cycle
has
been
unique.
Unfortunately,
many
people
who
have
tracked
this
housing
cycle
are
still
stuck
on
2008,
believing
that
what
happened
during
COVID-19
was
rampant
demand
speculation
that
would
lead
to
a
massive
supply
of
homes
once
home
sales
crashed.
This
would
mean
the
builders
couldn’t
sell
more
new
homes
or
have
housing
permits
rise.

Housing
permits,
starts
and
new
home
sales
were
falling
for
a
while,
and
in
2022,
the
data

looked
recessionary.
However,
new
home
sales
were
never
near
the
2005
peak,
and
the
builders
found
a
workable
bottom
in
sales
by
paying
down
mortgage
rates
to
boost
demand.
The
first
level
of
job
loss
recessionary
data
has
been
averted
for
now.
Below
is
the
chart
of
the
building
permits.

On
the
other
hand,
the
apartment
boom
and
bust
has
already
happened.
Permits
are
already
back
to
the
levels
of
the
COVID-19
recession
and
have
legs
to
move
lower.
Traditionally,
when
this
data
line
gets
this
negative,
a
recession
isn’t
far
off.
But,
as
you
can
see
in
the
chart
below,
there’s
a
big
gap
between
the
housing
permit
data
for
single-family
and
five
units.
Looking
at
this
chart,
the
recession
would
only
happen
after
single-family
and
5-unit
permits
fall
together,
not
when
we
have
a
gap
like
we
see
today.

From
Census:

Housing
completions:

Privately‐owned
housing
completions
in
February
were
at
a
seasonally
adjusted
annual
rate
of
1,729,000.

As
we
can
see
in
the
chart
below,
we
had
a
solid
month
of
housing
completions.
This
was
driven
by
5-unit
completions,
which
have
been
in
the
works
for
a
while
now.
Also,
this
month’s
report
show
a
weather
impact
as
progress
in
building
was
held
up
due
to
bad
weather.
However,
the
good
news
is
that
more
supply
of
rental
units
will
mean
the
fight
against
rent
inflation
will
be
positive
as
more
supply
is
the
best
way
to
deal
with
inflation.
In
time,
that
is
also

good
news
for
mortgage
rates.

Housing
Starts:

Privately‐owned
housing
starts
in
February
were
at
a
seasonally
adjusted
annual
rate
of
1,521,000.
This
is
10.7
percent
(±14.2
percent)*
above
the
revised
January
estimate
of
1,374,000
and
is
5.9
percent
(±10.0
percent)*
above
the
February
2023
rate
of
1,436,000.

Housing
starts
data

beat
to
the
upside,
but
the
real
story
is
that
the
marketplace
has
diverged
into
two
different
directions.
The
apartment
boom
is
over
and
permits
are
heading
below
the
COVID-19
recession,
but
as
long
as
the
builders
can
keep
rates
low
enough
to
sell
more
new
homes,
single-family
permits
and
starts
can
slowly
move
forward.

If
we
lose
the
single-family
marketplace,
expect
the
chart
below
to
look
like
it
always
does
before
a
recession
—
meaning
residential
construction
workers
lose
their
jobs.
For
now,
the
apartment
construction
workers
are
at
the
most
risk
once
they
finish
the
backlog
of
apartments
under
construction.

Overall,
the
housing
starts
beat
to
the
upside.
Still,
the
report’s
internals
show
a
marketplace
with
early
recessionary
data
lines,
which
traditionally
mean
mortgage
rates
should
go
lower
soon.
If
housing
leads
us
into
a
recession
in
the
near
future,
that
means
mortgage
rates
have
stayed
too
high
for
too
long
and

restrictive
policy
by
the
Fed
created
a
recession
as
we
have
seen
in
previous
economic
cycles.

The
builders
have
been
paying
down
rates
to
keep
construction
workers
employed,
but
if
rates
go
higher,
it
will
get
more
and
more
challenging
to
do
this
because
not
all
builders
have
the
capacity
to
buy
down
rates.
Last
year,
we
saw
what

8%
mortgage
rates
did
to
new
home
sales;
they
dropped
before
rates
fell.
So,
this
is
something
to
keep
track
of,
especially
with
a
critical

Federal
Reserve
meeting
this
week.