Housing Permits Lower Than Expected, So What?
Admittedly, this is going to be one of those statistics-less posts. Shame on me. But here it goes anyway.
I’m read a news byte on how applications for housing permits were down 1.2% (the article didn’t mention what the expectation was, but since the S&P 500 is down -.8%, as I write, I presume it was worse than expected).
I’m left feeling like so what.
I mean, business advertising, consumer spending, and, eventually, jobs, considerably outweigh housing permits.
One reason is that the credit markets are still EXTREMELY tough. I talked with one bank a few weeks ago who told me that they’re looking at like a 75% loan-to-value. Can you imagine? That was that particular bank, but the sentiment is still there.
I would also imagine that for the vast majority of people, buying a house is a BIG ticket item. So even if you had the credit, you may rather buy more gadgets, food, clothes, etc., but not a house. This means that there’ could be a strong recovery, people feel pretty good about their future, but have more immediate needs to take care of.
So I’d probably look to the housing permits (or starts) number as an indicator of big time growth and confidence in someone’s personal economic future and banks’ willingness to loan more for the same reasons. IMO, housing permits probably ranks behind job growth as an indicator that economic growth is in full swing.
I guess, if you want to wait until housing permits grow to signal economic growth, then by all means do so. But by then, people will have already been spending. Some of those things tend to be very interesting.
