Building permits & housing starts
Building permits are authorizations to build; housing starts are ground-breaking. Both lead actual construction and sales by months, and both sit at the extreme rate-sensitive end of the economy — housing is bought almost entirely with borrowed money.
Why housing leads recessions
The transmission is mechanical: the Fed hikes → mortgage rates jump → affordability collapses → permits fall → construction contracts → jobs and spending follow. Housing has contracted before nearly every post-war recession, often by more than a year — the sector 'starts' recessions as much as it signals them.
On this monitor
Two housing signals watch the pipeline: permits (the forward-looking authorization) and starts (the actual commitment). Both track sustained decline rather than a single weak print — housing data is noisy month-to-month, but a persistent downtrend has been one of the most reliable lead indicators in the panel.