What It Measures
Building permits measures the number of permits issued by local governments for new residential construction. Since permits must be obtained before construction begins, this data leads housing starts by approximately 1-2 months.
Not all permits result in actual construction (some expire or are cancelled), but the permit data provides an early read on housing intentions.
Why It Matters
Leading Indicator: Permits predict future housing construction and associated economic activity.Builder Confidence: Shows developers' willingness to commit to new projects.Supply Pipeline: Indicates future housing supply additions.Regional Planning: Used by local governments and businesses for planning.
How to Interpret
Permits-to-Starts Ratio: A high ratio suggests builders are hesitant to begin construction despite having permits.Single vs Multi-Family: Track both categories separately for different market signals.Year-over-Year Change: Better for trend analysis than volatile month-to-month changes.