Housing starts

RECENT NEWS
MarketWatch  Apr 17  Comment 
The pace of home construction picked up in March and earlier months’ activity levels were revised up, according to a report from the Commerce Department, signalling some relief for an inventory-starved housing market.
Wall Street Journal  Apr 17  Comment 
U.S. housing starts increased in March but single-family home construction pulled back, which could spell continued inventory shortages and rapid price increases for buyers in the coming months.
MarketWatch  Apr 17  Comment 
Wall Street Journal  Mar 16  Comment 
U.S. housing starts declined in February, returning to a long-term trend of modest improvement in single-family construction and a slowdown in apartment building.
MarketWatch  Mar 16  Comment 
Construction on new houses fell 7% in February, but housing starts are still close to a postrecession high and builders show no sign of slowing down.
MarketWatch  Feb 16  Comment 
U.S. housing starts soar in January
SeekingAlpha  Feb 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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