Dr. Ed’s
Economic
Indicators

HOUSING STARTS

Release Date: Mid-Month
Release Coverage: Prior Month's Data
Released By: U.S. Census Bureau
Official Release (weekly): http://www.census.gov/const/www/newresconstindex.html

Housing starts represents an estimate of the number of housing units for which construction was started. Specifically, housing starts are defined by the U.S. Census Bureau as excavation for the footings or foundation, or the first shovel of dirt to break ground. The report is released under the title "New Residential Construction."

In response to natural disasters such as Hurricane Andrew in August of 1992, that definition has been expanded to a housing unit built on an existing foundation after the previous structure had been completely destroyed. Housing starts are divided into single-family and multifamily (2+) units. Beginning construction on a 100-unit apartment building, for example, is counted as 100 starts.

WHAT DR. ED SAYS:

Housing is considered the most interest rate-sensitive sector of the economy. It often experiences large swings in activity in response to changes in the level of long-term interest rates such as those on mortgages. While residential investment represents just four percent of the level of GDP, due to its volatility it frequently represents a much higher proportion of changes in GDP over relatively short periods of time. Policy makers monitor the housing sector very carefully for clues about the near-term performance of the economy and for the effects of changes in financial conditions.

Housing market growth tends to have an overall positive effect on the stock market as spending in housing boosts purchases and consumer spending. It may also be beneficial to review the new residential construction press releases for the regional breakdown.

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