Home building, also known as home starts, is the start of construction on a new residential housing unit. Home starts are an important economic indicator watched by participants in the financial market as new housing creates additional spending by consumers on appliances and furniture.
Definition
A home build starts when groundbreaking occurs for a home’s foundation or footing. These home starts are estimates published by the U.S. Census Bureau on the 12th business day of each month in the New Residential Construction report. Along with home starts, it includes housing completions data as well as a count of building permits.
Importance
The housing industry is a key sector of the economy, and an even more important one for the real estate, construction, and banking industries. Home building measures a builder’s willingness to expend resources on new projects. This is dependent on the estimates of housing demand. If the estimates are high, builders will start to build more homes to meet the demand.
The New Residential Construction report breaks the United States into four regions: Northeast, Midwest, South, and West. This is due to some parts of the United States being subject to big seasonal variations. Storms and cold snaps can influence the number of home builds in an area.
What Counts as a Home Build?
As previously mentioned, a home build starts when groundbreaking occurs for a home’s foundation or footing. The monthly data from the New Residential Construction report divides these new home builds into three categories: single-family homes, multi-family housing of two to four units, and multi-family housing with five or more units.
The New Residential Construction report also measures home builds for privately-owned housing, including those started by private developers for sale to the public. These statistics exclude any group quarters such as dorms and rooming houses.
First State Investment Advisors has over 50 years of experience studying the data for home building. For a free consultation, call us today at (918) 492-1361.
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.