Housing starts

RECENT NEWS
Forbes  Dec 16  Comment 
Construction of new homes fell 1.6% in November and building permits tumbled 5.2%, as the housing market chugs along in its new post-recovery normal, data released Tuesday by the U.S. Commerce Department shows.
Wall Street Journal  Dec 16  Comment 
Housing starts fell 1.6% in November, the latest sign of an uneven housing recovery.
MarketWatch  Nov 19  Comment 
A tumble in construction started on apartments led to slower overall home building last month. Meanwhile, longer-term trends signaled that the home-construction market continued to rebound, and that busier building times may be ahead for...
Benzinga  Nov 19  Comment 
Housing starts and permits came in weaker than expected, with starts at 1.009 million vs. expectations of 1.028 million. Permits were softer as well, printing at 1.080 million compared to consensus of 1.035 million. Most of the weakness is...
Wall Street Journal  Nov 19  Comment 
Builders started construction on fewer properties last month, but a solid gain for single-family homes suggests the market may be strengthening heading into next year.




 
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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