What are housing starts?
Updated March 14, 2022
Housing starts is a term used to describe how many new residential construction projects begin at the start of a month, and is considered a significant barometer of the U.S. economy. On around the 17th of every month, the U.S. Commerce Department releases the New Residential Construction Report, which is collected by surveying home builders from around the country. Besides housing starts, this report also includes the number of new building permits and housing completions. The data are organized by region, and the Northeast, the Midwest, the South and the West are each summarized by percentage changes from month to month.
Housing starts is a term used to describe how many new residential construction projects begin at the start of a month, and is considered a significant barometer of the U.S. economy. Credit: IO Images/Pixabay
The reason housing starts are considered key to measuring the strength of the economy is that several industries are impacted by new-housing construction, from banking, mortgages and real estate to manufacturing and materials. In addition, new-home purchases will be on an upswing in a strong economy and will decrease in a down one.
Housing starts are defined by when construction begins on the foundations or footings of a residential structure. There are five kinds of residential structures that will be reported in housing starts data: single-family homes, condominiums and townhomes and multiunit structures that have five or more units (these are often apartment buildings).
For multiunit structures, a housing start is official when construction commences on the building, yet each unit in the building is considered an individual start. So if a building has 10 units, then that would be reported as 10 individual housing starts.