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An overview of housing starts

On Behalf of | Oct 12, 2022 | Real Estate |

A housing start is defined as the beginning of construction on a new home. Housing starts are a leading economic indicator representing the number of new homes started on a monthly basis. In July 2022, Connecticut and the rest of the country reached the highest number of housing starts for all home types since 2015. The data on housing starts is typically classified into single homes, single-family units or multifamily buildings with five or more units.

Understanding housing starts

Housing starts denote excavation or groundbreaking for a home’s footing or foundation. Sustained declines in housing starts can slow the economy into a recession. In contrast, a high number of housing starts can be an indicator of economic growth. Data on new privately-owned residential construction is provided monthly in survey reports conducted by the U.S Census Bureau and the Department of Housing and Urban Development. Housing starts initiate once municipalities approve and issue building permits for contractors to begin construction.

More on housing starts

Housing starts data has been collected since 1959, making it one of the oldest forms of data on new home construction currently used in the U.S. The real estate data is collected on the first day following the reporting month and is released about a week later, towards the middle of the month. A significant proportion of American investments goes into housing, so housing starts are typically sensitive to changes in interest rates.

As the economy strengthens, consumers feel more confident about their income level and are more likely to invest in new homes. Housing also impacts other industries like banking, real estate, construction, labor and raw materials. Housing starts provide insight into consumer confidence, economic activity and Americans’ level of wealth. The Federal Reserve and other government agencies use housing starts data to evaluate the state of the economy.