There were 105,100 housing permits filed in May 2020, climbing above 100,000 permits after one month under that level in April. Permits filed in May were down 15.4% compared with one year ago, which was the second month in a row with contraction more than 15%. In May, the annual rate of growth decelerated to 4.4%, which made it the ninth-straight month of growth but the second month of decelerating growth.  

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.98%. This was the fifth consecutive month and eight of the last 10 that the real rate was negative. The real rate would have been even lower except the inflation rate has fallen significantly. In May, the annual rate of inflation was just 0.12%, which was the lowest rate since September 2015. In May, the year-over-year change in the real rate was -121 basis points. The change was negative for the 17^th month in a row.

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 these data points down the line. However, decreased economic activity from COVID-19 may prevent that this cycle.