What It Measures
Housing starts counts the number of privately-owned housing units on which construction has started. A start is defined as the beginning of excavation for the foundation. The data includes:
- Single-family homes
- Multi-family buildings (apartments, condos)
Reported as a seasonally adjusted annual rate (SAAR).
Why It Matters
Economic Multiplier: Housing construction drives employment and spending across many industries (materials, appliances, furnishings).Interest Rate Sensitive: Housing is highly responsive to mortgage rates, making it a key Fed policy transmission channel.Supply Indicator: Shows whether housing supply is keeping pace with demand.Leading Indicator: Housing often leads the broader economy into and out of recessions.
How to Interpret
Single vs Multi-Family: Single-family starts better reflect consumer housing demand; multi-family reflects rental market conditions.Permits vs Starts: Building permits (also released) lead starts by 1-2 months.Regional Breakdown: Housing conditions vary significantly by region.
Key Levels to Watch
| Level | Interpretation |
|---|---|
| Above 1.5 million | Strong housing construction |
| 1.2-1.5 million | Healthy housing activity |
| 1.0-1.2 million | Below-average construction |
| Below 1.0 million | Weak housing market |