What's the difference between housing starts and building permits?

By Brent Radcliffe AAA
A:

Housing starts and building permits are economic indicators used to determine the health of the housing sector. In the United States, housing start and building permit data is released by the Census Bureau, and is estimated from the Survey of Construction (SOC) and the Building Permits Survey (BPS). Data is released each month in the New Residential Construction report.

The building permit statistic is an estimate of the number of new housing units that have been issued a permit during a given month. The Census Bureau collects permit data by sending a survey to permitting offices.

The housing starts statistic indicates the number of housing units that began construction during a given time period. Field representatives of the Census Bureau sample individual permits from permit offices, and check with permit holders to determine if construction has begun.

Economists look at building permits and housing starts to determine how well the economy is performing. If more building permits are being issued economists may assume that more investment is being allocated to the housing market, which traditionally makes up 5% of the U.S. economy. A decline in the number of housing starts relative to building permits may indicate that planned construction is being put off, possibly because of unfavorable economic conditions.

RELATED FAQS

  1. Is industrialization good for the economy?

    Find out why industrialization can be considered the most important economic transition in history, dramatically increasing ...
  2. What's does the current account have to do with the trade balance?

    Learn how a nation's trade balance is factored into its current account, and the differences between these two common terms.
  3. How does the stock market affect gross domestic product (GDP)?

    Find out how the stock market affects gross domestic product (GDP) through two different channels: financial conditions and ...
  4. What is the difference between disposable income and discretionary income?

    Learn about disposable and discretionary income, including why these measures are important, the main difference between ...
RELATED TERMS
  1. Building Permits

    A type of authorization that must be granted by a government ...
  2. Housing Starts

    The number of new residential construction projects that have ...
  3. Gentrification

    Gentrification refers to when a neighborhood or city undergoes ...
  4. Home (legal definition)

    A home is the place where a person has their permanent primary ...
  5. Real Estate

    Land plus anything on it, including buildings and natural resources.
  6. Indicator

    Indicators are statistics used to measure current conditions ...

You May Also Like

Related Articles
  1. Investing Basics

    Investing In Real Estate Versus REITs

  2. Home & Auto

    3 Ways To Value Real Estate Investments

  3. Home & Auto

    How To Calculate ROI For Real Estate ...

  4. Term

    Building Permits

  5. Term

    Housing Starts

Trading Center