Housing Starts

Housing starts are an important leading indicator and have a significant impact on economic forecasting.  The housing industry represents about 27% of total investment spending therefore, sustained declines in housing starts could push the economy into recession. Inversely, sustained increases in housing activity promote economic growth.  

Housing start data is compiled from the various regions in the U. S. along with building permit data.  Permit data provides insight into short term housing and other economic activity to occur in the near future. Housing data has a profound impact on economic forecasting therefore, it is included in the index of leading economic indicators.

Mortgage rates directly impact housing activity.  Higher rates increase housing costs reducing qualified borrowers and housing starts while lower rates enhance housing affordability and spark home sales and new starts.

Housing data impacts the bond market. Unexpected increases can be considered inflationary and result in falling bond prices while pushing up yields and interest rates.  A weak report has an opposite impact on the market.