Housing starts

RECENT NEWS
Wall Street Journal  Mar 17  Comment 
Housing starts plunged in February, the latest sign that harsh winter weather is slowing economic activity.
USAToday.com  Mar 17  Comment 
Snowstorms hampered projects in some parts of the U.S. last month.
Wall Street Journal  Feb 18  Comment 
Builders slowed new-home construction last month after a brisk December, pointing to uneven demand in an otherwise slowly recovering housing market.
Clusterstock  Feb 18  Comment 
Housing starts and building permits fell in January. The pace of starts fell 2.0% to an annualized rate of 1.065 million. This was a bit worse than the 1.07 million rate expected by economists. Single family starts fell by 6.7%, while...
The Hindu Business Line  Feb 17  Comment 
Tata Housing Development Company has started five affordable housing projects, including one in the city, a top official of the company said today.“We are setting up five affordable housing...




 
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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