This metric represents the number of new residential construction permits issued.

Housing is often seen as a cornerstone of economic health because it involves a myriad of sectors—construction, real estate, lending, and more.

An increase in housing permits signals confidence in the market and tends to precede an uptick in construction jobs and consumer spending on home goods.

Conversely, a decline in permits can be a red flag for an economic slowdown as it might indicate dwindling consumer confidence and spending. In the broader context, housing is not just an economic indicator but also a social one.

It influences and is influenced by demographic trends, lending rates, and overall consumer sentiment.

A decline in housing permits is often a forewarning of diminished economic activity, not only in the housing market but in related sectors as well.

Recession signal

Contraction from a peak of housing permits does not mean a recession is coming, but they consistently downtrend into a recession. In most recessions, housing permits is down more than 40% from it’s peak. In 1980 crash it was only 35% and in COVID it was only 6.4%. The rest are >-40%.

Track this yourself

You can find Housing permit information on TradingView: https://www.tradingview.com/chart/v7ZG3yMA/?symbol=ECONOMICS%3AUSBP

Install US Recessions indicator to get the green boxes, and draw a box around the 1 – 1.2m mark. Previously, if the data gets this low, we’re in a recession.