FYI: In our earlier post on Housing Starts and Building Permits, we highlighted how uncommon back to back better than expected readings in both reports have been in recent history. Strong economic data is obviously a positive for the economy, but in this post, we wanted to illustrate how housing data and the economic cycle have interacted with each other over time.
The chart below shows historical levels of Housing Starts (on a 12-month average basis) going back to 1967 with economic recessions shaded in gray. Looking at this chart, two things stand out. First, even after more than eight years of recovery, current levels of Housing Starts are closer to levels seen at the depth of recessions rather than late in an economic cycle. The second thing that stands out is that ahead of every prior recession since 1967, Housing Starts peaked and began to roll over well in advance of the economy’s peak. With current levels of Housing Starts right near their highs of the cycle, that would imply that any possible recession would still be months out from here.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/housing-starts-and-the-economic-cycle/
