There were 134,200 housing permits filed in September 2020, which was the second highest month since June 2007. Total permits in the three-month period ending September 2020 were the highest three-month total since July 2007. COVID-19, work-from-home policies and extremely low mortgage rates have created demand for new homes in the suburbs at the highest rate since the housing bubble burst and the Great Recession followed.

Permits filed in September increased 16.8% compared with one year ago. Three of the last four months had growth faster than 11%. Housing permits have grown for 12 of the last 15 months. In September, the annual rate of growth accelerated to 6.2%. September was the 13^th-straight month of growth and the seventh in the last eight with growth faster than 5.0%.

In September, the year-over-year change in the real rate was -60 basis points. The change was negative for the 21st month in a row. The change was near its highest level since January. Since April, the trend in the year-over-year change in the real 10-year Treasury was less negative. A less negative change in the real rate is less stimulating to the economy, which is not what the Federal Reserve wants.

However, the Federal Reserve has stated it will not pursue negative interest rates. Therefore, the only way for the change to be more negative is for inflation to increase, which is why the Federal Reserve has stated a new policy of average inflation targeting. This policy basically states that the Federal Reserve will allow inflation to run substantially higher than its target of 2% so that the long run average of inflation is 2%. 

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.