What are Housing Starts?

Housing starts are one among many economic indicators used to judge the health of an economy and the real estate market. Each housing start represents the beginning of one residential home or unit. Many governments keep housing start statistics and release them to the public on a monthly basis so that people can track economic growth. People who work in the financial market are usually especially interested in tracking housing starts, as are real estate agents and other real estate professionals, such as contractors, who may be concerned with the health of the housing market.

Statistics on new construction include the construction of standalone residences, townhouses, condominiums, and apartment complexes. Each unit is defined as a single “start,” so a 30 unit apartment complex would be counted as 30 housing starts. A unit is considered started when construction begins on the foundation of the residence.

Reports on housing starts are usually released around the middle of every month, using data from the last month. In addition to including information about starts, they indicate how many building permits were issued, and how many residential buildings were completed. While the rates do fluctuate seasonally, marked changes or changes from prior years can be a cause for economic concern; if there are fewer starts, it suggests that fewer people are interested in buying homes.

Detailed statistics on housing starts often break down the type of construction, so that people can get an idea of what kind of residential structures are being built, and they may also break up statistics by region. Looking at housing starts regionally can show people where economic growth is occurring and where slowdowns may be emerging. Resources for information on housing starts can include the United States Census Bureau, the Department of Housing and Urban Development, and the National Statistics office in the United Kingdom.

People may notice that information on housing starts is often discussed in the news when new reports are issued. They should be aware that statistics are often manipulated in creative ways to suggest or reinforce a particular message. For example, if a radio announcer says “housing starts are down 12%,” it's not clear which period is being covered, and which periods are being compared. Comparing housing starts monthly, quarterly, or yearly can reveal different results, as can comparing starts with the previous month, the same month last year, last year's monthly average, and so forth.