Thursday, March 1, 2018

A note about residential spending

 - by New Deal democrat

Today is one of those days where a whole slew of data gets reported. I wanted to add a quick note about residential construction.
Residential construction spending has the virtue of being "where the rubber meets the road" in the housing market, and further, while it lags permits, it is the least volatile measure of all, even compared with single family permits. Here they are measured YoY:

If housing signals recession, we will see it first in permits (and new home sales), but residential construction should confirm the negative reading months before any downturn actually begins.

In case the far right is too microscopic for you, growth in residential construction has decelerated sharply in the last few months, and as of this morning's report residential construction is up about 4% YoY.  This is the worst reading since 2012, but is obviously still positive.