Release Date:
On or around the 17th of each month
Release Time:
8:30am Eastern Standard Time
Coverage:
Previous month\'s data
Released By:
U.S. Census Bureau
Latest Release:
http://www.census.gov/const/www/newresconstindex.html


Background
The New Residential Construction Report, more commonly known as "housing starts" on Wall Street, is a monthly report issued by the U.S. Census Bureau jointly with the U.S. Department of Housing and Urban Development (HUD). The data is derived from surveys of homebuilders nationwide, and three metrics are provided: housing starts, building permits and housing completions. A housing start is defined as beginning the foundation of the home itself, while building permits are counted as of when they are granted.
Both building permits and housing starts will be shown as a percentage change from the prior month and year-over-year period. In addition, both data sets are divided geographically into four regions: Northeast, Midwest, South and West. This helps to reflect the vast differences in real estate markets in different areas of the country. On the national aggregates, the data will be segmented between single-family and multiple-unit housing, and all information is presented with and without seasonal adjustment.
Housing starts and building permits are both considered leading indicators, and building permit figures are used to calculate the Conference Board's U.S. Leading Index. Construction growth usually picks up at the beginning of the business cycle (the Leading Indicator Index is used to identify business cycle patterns in the economy, and is used by the Federal Open Market Committee (FOMC) during policy meetings).
What It Means for You
The housing market may show the first signs of stalling following a rate hike by the Federal Reserve. This is because rising mortgage rates may be enough to convince homebuilders to slow down on new home starts. For traders looking to evaluate the real estate market, housing starts should be looked at in conjunction with existing home sales, the rental element of the Consumer Price Index and the Housing Price Index (also available from the Census Bureau). (For related reading, see Investing In Real Estate.)
According to the Census Bureau, "it may take four months to establish an underlying trend for building permit authorizations, five months for total starts and six months for total completions", so smart traders will look more closely at the forming patterns to see through often-volatile month to month results.
Strengths
-Very forward-looking, especially building permits; a good gauge for future real estate supply levels
-Often used to identify business cycle pivot points
-Sample size covers approximately 95% of all residential construction in the U.S.

Weaknesses
-No differentiation between size and quality of homes being initiated, only the nominal amount
-Only focuses on one component of the economy



Durable Goods

Related Articles
  1. Investing

    Real Estate Indicators For Prospective Homebuyers

    If you want to buy a home but you’re holding out until market conditions show signs of improvement, housing indicators can help point the way.
  2. Investing

    8 Signs Of A Real Estate Rebound

    Wondering when prices will start to turn around in your area? We'll show you how to get in the know.
  3. Investing

    Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.
  4. Insights

    The Canadian Economy, At A Glance

    The 12 economic indicators described here together provide a comprehensive picture of the state of the Canadian economy.
  5. Investing

    Housing Market to Heal (But Remain Cautious of Homebuilders)

    Despite last week’s troubling drop in new home sales, the housing market should continue to recover. However, a sanguine view on housing doesn’t necessarily translate into a positive view on ...
  6. Personal Finance

    2 Reasons Why the Stock Market Leads the Economy

    Pay attention to how economic strength can follow a sustained stock market advance and how economic weakness can result from a stock market slump.
  7. Financial Advisor

    Real Estate is Hot, But for How Long? (TOL)

    Real estate is in high demand, but is the hype sustainable?
  8. Managing Wealth

    The Truth About Real Estate Prices

    Historical housing price data suggests ongoing increases in housing prices, but these numbers don't tell the whole truth.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center