Previous : 947 Thousand
Forecast : 935 Thousand

Definition : The New Residential Construction Report known as Housing Starts is a monthly report issued by the US Census Bureau jointly with the Department of Housing and Urban Development (HUD). The data is derived from compiled results from survey to homebuilders nationwide, and they cover three angles: housing star, building permits and housing completions.

Housing starts are defined as the beginning of the foundation of homes, it's an important economic indicator because they show how much money the general public has. More money in hand usually means more spending.

Building permit is a permit required for new construction, or adding onto pre-existing structures and in some cases for major renovations as they are accounted when they are granted. Generally, the new construction must be inspected during construction and after completion to ensure compliance with national, regional, and local building codes. Failure to obtain a permit can result in significant fines and penalties, and even demolition of unauthorized construction if it cannot be made to meet code.

Housing starts and building permits are considered leading indicators, while building permit figures are used to compile the Conference Board's Leading Index.

Why is it useful?If the building permits increase than the housing start could increase but not necessarily. A person could obtain a permit to build but decided not to build for the next couple of years. That is why the housing starts are a better gauge into future activity than building permits.

If there is a rise in housing starts it likely means there is more money in the economy. Additionally if there are more Housing Starts in a time period the interest rate is low enough for individuals to be willing to borrow money from banks. This will help decrease the unemployment rate because more people will be required to build the houses. Since the economy is strong, the consumers will build more confidence to spend in their economy and the forever cycle of inflation and interest rates begins.

In addition to that, construction spending will increase to purchase the raw materials needed to build the houses or renovate the houses. Once construction is done, these houses will be placed in the market under either existing house sales or new house sales.