Housing Starts and Building Permits

This monthly release from the Census Bureau tracks the number of new homes being built and permits for future construction. Home building has quite a strong effect on the economy – from demand (or lack thereof) for associated labor, building materials, and goods to furnish homes – the industry can affect many diverse businesses.

Housing starts include building of single-family homes, buildings with two to four units, and buildings with five or more units. Building permits are required in advance of a build in most locations and tend to be a good predictor of future home building activity. Incidentally, Building Permits are one of the ten components of the Conference Board’s Leading Economic Indicator.

The latest report for Housing Starts for August came in at 1.283 million, 11.3% below the revised July reading and worse than forecast. Building Permits were at 1.543 million, 6.9% above the revised July rate.

Outside of the pandemic recession, Housing Starts are at their lowest since July of 2019 and have seen an overall downtrend since their peak in April of 2022. This indicates that new home builds may be slowing, which confirms the weakness shown in NAHB builder sentiment just released yesterday (see our Economic Trends here). Building Permits ticked up in August but is still well below the November 2021 peak and has bounced around over the last twelve months (see inset in graph).

To find out more about what this means for the market and investing, consider becoming a subscriber where you can access our exclusive Subscriber section including Market Insights and the Weekly Hotline as well as our monthly Market Letter, released the third Friday of each month (this Friday!).