Housing Starts/Building Permits

The Housing Starts report measures the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. It is a seasonally adjusted annualized rate of houses (residential units) started in a given month, taken from a sample of 844 out of 17,000 permit sites. The monthly national report is broken down by region, and shows the breadth of change. The regional data is subject to volatility due to weather changes and/or natural disasters. Housing is very interest rate sensitive and is one of the first sectors to react to changes in interest rates. Significant reaction of start/permits to changing interest rates signals interest rates are nearing trough or peak. To analyze, focus on the percentage change in levels from the previous month. This indicator becomes important around turning points in the business cycle. Home builders don't start a house unless they are fairly confident it will sell upon its completion, if not before. Changes in the rate of housing starts tell us a lot about home demand for homes and construction outlook. Furthermore, each time a new home is started, construction employment rises, revenues for the home builder and a myriad of other producers also increase; the economic "ripple effect" can be substantial. The Housing Starts report is scheduled for release at 7:30 (CST) around the 16th of the month by the Census Bureau of the Department of Commerce.

POTENTIAL IMPACT ON INTEREST RATES: MODERATE