Housing starts

RECENT NEWS
Wall Street Journal  Apr 16  Comment 
U.S. home building is off to a slow start this year, though builders remain upbeat amid improving weather, steady job creation and low interest rates.
New York Times  Apr 16  Comment 
Starts for single-family homes increased in March, but the gains made only a tiny dent in losses of the previous month.
Yahoo  Apr 16  Comment 
U.S. housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economy could struggle to rebound from a soft patch hit in the first quarter. There are expectations...
MarketWatch  Apr 16  Comment 
Housing starts rose 2% in March after being snowed out in February, the government said Thursday.
New York Times  Apr 16  Comment 
U.S. housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economy could struggle to rebound from a soft patch hit in the first quarter.
Clusterstock  Apr 16  Comment 
We didn't get the March rebound in housing starts we were hoping for. The pace of starts climbed just 2.0% to an annualized rate of 926,000 units. This was well below the 1.04 million units expected. The pace of building permits dropped 5.7%....
SeekingAlpha  Apr 16  Comment 




 
TOP CONTRIBUTORS

Housing starts is a closely-watched indicator of the health of the home construction industry. Homebuilding is a major component of the overall economy due to all its size and its linkages with finance, basic materials, home furnishings and appliances, employment and overall growth.

Source

The Census Bureau, together with the Department of Housing and Urban Development (HUD) jointly report on new residential construction each month. The report has three components: Building permits, housing starts and housing completions. See [[1]]

Image:starts.png


Discussion

  • Housing starts is a measure of the number of privately-owned new housing units that began construction in the reporting month. It is usually reported at the seasonally adjusted annual rate (SAAR). The most recent peak in starts was 1.8 million units in November 2006. In February of 2008 the SAAR was 1,065,000. (These figures include all housing types except mobile homes/manufactured housing.)
  • Before a housing unit is built a building permit is issued. In a sense, building permits are a leading indicator of how many starts there will be in a month or two. In February 2008 the SAAR for permitted units was 978,000, some 7.8% below the revised January rate.
  • Housing completions tells us how many of the homes that were permitted and started have been finished. This measure doesn’t get much attention by the media or most investors. As of February 2008 completions were at the SAAR of 1,208,000, which is about 8.8% below January and 26% below the rate one year earlier.


Note

In general, and for a variety of reasons, starts are usually about 2.5% less than permits and completions are about 4.0% less than starts. The greatest variability is in the multifamily sector, where starts have been 22.5% less than permits (mostly due to reclassification to single-family) and completions have been 7.5% less than starts.

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