Housing Starts
Housing starts measure the number of new residential construction projects begun in a given month across the United States, serving as a key indicator of homebuilding activity and broader economic health.
The Housing Starts and Building Permits report is released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) around the middle of each month, covering the prior month's data. It is one of the most watched housing market indicators and a component of the Leading Economic Index compiled by the Conference Board.
A housing start is counted when excavation begins for the footings or foundation of a building. The report separately tracks single-family homes and multifamily structures (buildings with five or more units), as these two segments respond differently to economic conditions. Single-family starts are more sensitive to mortgage rates and household formation trends, while multifamily construction tends to be driven by rental demand and institutional investment cycles.
Housing starts are a leading economic indicator for several reasons. Residential construction activity is highly labor-intensive and draws on a wide range of industries — lumber, concrete, steel, appliances, plumbing, electrical systems — creating a significant multiplier effect across the economy. A pickup in starts typically presages strength in retail sales of home furnishings, increased employment in construction trades, and higher demand for building materials.
The report also includes data on building permits, which represent authorization to begin construction and can lead actual starts by one to three months. Permits are therefore considered an even more forward-looking sub-indicator. Housing completions round out the report, showing the stock of newly finished homes entering the market.
When the Federal Reserve raises interest rates, mortgage rates typically follow, which can sharply curtail housing starts as affordability deteriorates. This transmission mechanism makes housing one of the most interest-rate-sensitive sectors of the U.S. economy. Equity investors track housing starts to assess homebuilder stocks, building materials suppliers, and mortgage-related financial companies.