There were 139,600 housing permits filed in July 2021, which was 3.1% more than the number of permits filed one year ago. This was the slowest rate of month-over-month since October 2020. Unlike many other economic data series, the rate of change in July 2021 was not affected by an easy comparison with July 2020. In fact, just the opposite. July 2020 was a very strong month for housing permits. 

Regarding the annual rate of change, July was the 23^rd straight month of growth. The annual rate of growth decelerated to 19.5%, which was the first month of decelerating growth since January.

While the nominal 10-year Treasury rate was down slightly, the real 10-year Treasury rate fell to its lowest rate since June 1980. The reason for this was that the rate of inflation was above 5% for the second consecutive month just 2 basis points from the highest rate of inflation since August 2008. As the real 10-year Treasury rate is the nominal rate minus the inflation rate, the real 10-year Treasury rate was -4.05% in July. Instead of pushing nominal rates into negative territory, the Fed is using higher inflation to make real rates negative. This is very stimulative to the economy.

The year-over-year change in the real 10-year Treasury, now -368 basis points, was slightly less negative than last month. However, the change was less than -350 basis points for the third straight month, and the change was negative for 22 of the last 24 months.

The change in the 10-year Treasury rate is a good leading indicator of housing permits and construction spending. A decreasing year-over-year change in the real 10-year Treasury rate typically leads to increases in housing permits.