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Housing Starts

In short

Number of new residential construction projects begun — leading economic indicator

Housing starts track how many new homes are being built. When builders are confident, they start more homes — it's a sign of a healthy economy. A housing bust (like 2008) can drag down the entire economy.

Housing starts measure new residential construction units started monthly. Housing is a large economic multiplier — each new home creates construction jobs, demand for appliances, furniture, and mortgages. It leads GDP by 6-12 months and is sensitive to mortgage rates.

Related concepts

  • GDP Growth — GDP growth measures how much the economy grew (or shrank). Think of it as the economy's report card. Above 2-3% is healthy. Two consecutive negative quarters = recession. Recessions hurt stocks but eventually lead to recoveries.
  • Fed Funds Rate — The Fed funds rate is the interest rate banks charge each other overnight. When the Fed raises it, borrowing becomes more expensive everywhere — mortgages, car loans, business loans. Higher rates usually hurt stocks, especially growth stocks.
  • Consumer Confidence — Consumer confidence surveys ask regular people if they feel good or bad about the economy and their finances. Since consumer spending is 70% of GDP, when people feel bad, they spend less, and the economy slows.
  • Unemployment Rate — The unemployment rate shows what percentage of people who want to work can't find a job. Below 5% is considered healthy. Very low unemployment (below 3.5%) can actually cause inflation as companies compete for workers.