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       #Post#: 271--------------------------------------------------
       Housing Starts
       By: fxvictory Date: December 10, 2014, 9:41 pm
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       Definition
       A housing start is registered at the start of construction of a
       new building intended primarily as a residential building. The
       start of construction is defined as the beginning of excavation
       of the foundation for the building.
       Why Investors Care
       Two words...Ripple Effect. This narrow piece of data has a
       powerful multiplier effect through the economy, and therefore
       across the markets and your investments. By tracking economic
       data such as housing starts, investors can gain specific
       investment ideas as well as broad guidance for managing a
       portfolio.
       Home builders usually don't start a house unless they are fairly
       confident it will sell upon or before its completion. Changes in
       the rate of housing starts tell us a lot about demand for homes
       and the outlook for the construction industry. Furthermore, each
       time a new home is started, construction employment rises, and
       income will be pumped back into the economy. Once the home is
       sold, it generates revenues for the home builder and a myriad of
       consumption opportunities for the buyer. Refrigerators, washers
       and dryers, furniture, and landscaping are just a few things new
       home buyers might spend money on, so the economic "ripple
       effect" can be substantial especially when you think of it in
       terms of more than a hundred thousand new households around the
       country doing this every month.
       Since the economic backdrop is the most pervasive influence on
       financial markets, housing starts have a direct bearing on
       stocks, bonds and commodities. In a more specific sense, trends
       in the housing starts data carry valuable clues for the stocks
       of home builders, mortgage lenders, and home furnishings
       companies. Commodity prices such as lumber are also very
       sensitive to housing industry trends.
       Importance
       The housing starts report is the most closely followed report on
       the housing sector. Housing starts reflect the commitment of
       builders to new construction activity. Purchases of household
       furnishings and appliances quickly follow.
       Interpretation
       The bond market will rally when housing starts decrease, but
       bond prices will fall when housing starts post healthy gains. A
       strong housing market is bullish for the stock market because
       the ripple effect of housing to consumer durable purchases spurs
       corporate profits. In turn, low interest rates encourage housing
       construction.
       The level as well as changes in housing starts reveals
       residential construction trends. Housing starts are subject to
       substantial monthly volatility, especially during winter months.
       It takes several months to establish a trend. Thus, it is useful
       to look at a 5-month moving average (centered) of housing
       starts.
       It is useful to examine the trends in construction activity for
       single homes and multi-family units separately because they can
       deviate significantly. Single-family home-building is larger and
       less volatile than multi-family construction. It is more
       sensitive to interest rate changes and less speculative in
       nature. The construction of multi-family units can be
       substantially influenced by changes in the tax code and
       speculative real estate investors.
       Housing construction varies by region as well. The regions of
       the United States do not all follow exactly the same economic
       patterns because industry concentration varies in the four major
       regions of the country. The regional dispersion can mask
       underlying trends. The total level of housing construction as
       well as the regional distribution of housing construction is
       important.
       Housing permits are released together with housing starts every
       month and are considered a leading indicator of starts. In
       reality, housing permits and starts typically move in tandem
       each month. However, there are some exceptions. For instance, if
       permits are issued late in the month, and weather does not
       permit immediate excavation, then permits might lead starts. For
       the most part, though, permits are not a good predictor of
       future housing starts. Incidentally, housing permits (but not
       starts) are one of the ten components of the index of leading
       indicators compiled by The Conference Board.
       Frequency
       Monthly
       Source
       U.S. Census Bureau, U.S. Department of Commerce and U.S.
       Department of Housing & Urban Development.
       Availability
       Usually during the third week of the month.
       Coverage
       Data are for the previous month. Data for June are released in
       July.
       Revisions
       Yes.
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