There were 128,300 housing permits filed in January 2020, which was the highest total for January since 2006 (permits are seasonal). Permits filed in January increased 13.7% compared with one year ago. Housing permits grew seven of the last eight months and in six of those months, the growth was faster than 11.5%.

Regarding the annual rate of change, January was the 18^th-straight month of growth and the 10^th in the last 12 with growth faster than 5.0%. While the annual rate of growth decelerated slightly to 5.8%, the one-month and three-month growth rates indicate that the annual rate of growth will accelerate in the upcoming months.

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.07%. This was the 13^th consecutive month and 16^th of the last 18 that the real rate was negative. However, the rate was grinding slowly higher since April.  January’s real rate was the highest since December 2019, which was the last time the real 10-year Treasury rate was positive.

In January, the year-over-year change in the real rate was 6 basis points, which was the first time that the change was positive since December 2018. As much as the absolute level of interest rates, it is the relative change in interest rates that drives additional borrowing and spending. 

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