Housing Starts

Housing starts measure the number of new residential housing units on which construction has begun. Because new housing generates spending on construction, appliances, furniture and related services, housing starts are a widely watched economic indicator that sheds light on housing demand, construction activity, employment, and broader consumer spending.

Key takeaways

• A housing start is recorded when construction begins (groundbreaking or excavation for the foundation).
• Each unit in a multi‑unit building counts separately (a 25‑unit apartment building = 25 starts).
• Data are reported monthly and presented as seasonally adjusted annual rates to account for regular seasonal patterns.
• Monthly figures are volatile and subject to sampling error; trends are best assessed over several months.

What counts as a housing start

Housing starts include privately owned units begun for sale or rent. The Census Bureau classifies starts into three categories:
* Single‑family homes
Multi‑family (2–4 units) — data typically unadjusted
Multi‑family (5+ units, e.g., apartment buildings) — data provided adjusted and unadjusted

Group‑quarters (dormitories, rooming houses) are excluded.

How the data are measured

The U.S. Census Bureau publishes the New Residential Construction report monthly. Key measurement features:
* The headline number is a seasonally adjusted annual rate (SAAR), which annualizes the monthly estimate after adjusting for seasonal patterns.
* The report breaks out starts by four regions: Northeast, Midwest, South, and West.
* Short‑term weather and local disruptions can cause significant month‑to‑month swings.

Sampling and statistical uncertainty

• Starts for buildings with five or more units are counted comprehensively; starts for 1–4 unit housing are estimated from a sample of permits (roughly 2% of national starts in that category).
• To reflect sampling and reporting variability, the monthly release provides error margins (typically 90% confidence intervals) for month‑to‑month and year‑over‑year changes.
  Example: an initially reported 1.7% monthly decline in single‑family starts (March 2022) carried a ±12.3% 90% confidence interval, illustrating potential revision risk.

Interpreting housing starts

• Short‑term readings are noisy; the Census Bureau notes it can take about six months of data to identify the underlying trend.
• Rising starts generally indicate stronger builder confidence and expected housing demand, and they can boost sectors tied to construction and durable goods.
• Declining starts may signal weakening demand, tighter credit conditions, or rising costs that deter builders.

Bottom line

Housing starts are a valuable forward‑looking indicator of construction activity and housing market health, but individual monthly figures are volatile and subject to sizeable sampling error. Use seasonally adjusted trends over multiple months, and consider complementary indicators (building permits, completions, mortgage activity) when assessing the housing market.

Sources

• U.S. Census Bureau — New Residential Construction / Monthly New Residential Construction / Survey of Construction
• National Association of Home Builders (starts and permits data)