Building Permits Hit Eight Year High

Building permits, a key indicator for the housing market because they represent homebuilders’ market expectations for housing, saw strong performance in May, hitting an annual rate of 1,275,000. This was 11.8 percent over April’s rate of 1,140,000 and is 25.4 percent higher than May 2014’s estimated rate of 1,017,000, the Census Bureau reported. May’s permit activity represented the highest point in nearly eight years, and was well over analysts’ expectations for a rate of 1,100,000. Permits issued for single-family homes in May were at a rate of 683,000, which was 2.6 percent higher than April’s rate of 666,000. “Residential construction has been the laggard in this recovery and the moon shot surge in new permits today means the final piece of the recovery puzzle is now falling into place,” MUFG Union Bank Chief Financial Economist Chris Rupkey told the Reuters news service. “With an improving job market and strong real wage gains, alongside savings from lower gas prices, there is every reason to believe that further strength in consumer spending lies ahead,” Andrew Labelle, economist with TD Economics, wrote in a client statement.