Posted in Finance, Accounting and Economics Terms, Total Reads: 155
Definition: Housing Starts
Housing Starts is an economic indicator to identify the real growth in an economy. People generally purchases the houses when they have confident of stream of money and/or there is a possibility of sky rocketing of prices of real estate. For the calculations, only those units are taken into consideration on which the construction has commenced.
The increase in number of units indicates that strength of an economy. The increase in number of units indicates increase in demand for the raw materials, labor, Mortgage sector, Construction, Real Estate. It also indicates increase in the disposable income of individuals. I also help to distinguish between the demand and supply of real estate in different parts of US. There is also a seasonal in the trends of the housing starts. Hence the data provided by the govt. agency is both seasonal as well as unseasonal of different parts of the US.
There are certain positive as well as negative of this economic indicator. Positives are it covers most of the residential construction in US and it is a leading indicator. Negatives points are more concentration on one area of economy and no differentiation between houses based on size and quality.