Housing starts is an economic indicator that tracks the number of new dwelling units that has started construction within a specified period.
Depending on the methodology that is used to calculate it, housing starts can refer to statistics for a particular month, quarter, year, etc.
It can be broken down and itemized into:
- Single family homes
- Town houses
- Condominium units
- Apartment buildings consisting of 5 or more units
- etc
Sometimes simply known as house starts, this indicator that plays a role in showing the demand and supply trend of housing.
For example, if the housing start of a particular month has grown 10% compared to the previous month, it can be deduced that demand for new homes are rising and supply would soon come onto the market.
And if the numbers are falling, it can mean a decreasing demand. Maybe due to increasing mortgage rates.
And since the data can be itemized, it can also sometimes show a movement of homebuyer preferences when one category drops but another rises.
For example, when condominium numbers fall and town houses increase.
A decline in housing starts in a geographic area coupled with an increase in another area can also indicate that people are relocating.
It is generally agreed that growing housing starts is a sign of a healthy economy.
The count of housing starts come from the issuance of building permits.
For example, a certain number of permits were issues in the month would reflect the housing start number of the month.
However, it must be noted that
The indicator is also related to interest rates for loans, especially with mortgages.
The lower the interest rates, the more people would borrow to purchase new homes and the more builders would borrow for construction as well.
