Building Permits, Housing Starts Signal Mixed Housing Market Sentiment

Building Permits tracks the change in government issued new building permits from the prior month. Housing starts tracks the change in the number of new residential buildings that began construction during the month. Both signal to the health of the US housing market. Larger-than-expected increases in housing starts and building permits suggest increased household income and in turn an economic expansion, and visa versa. According to the US Department of Housing and Urban Development, privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000, higher than the 710,000 estimate. This is 4.5 percent above the revised February rate of 715,000 and is 30.1 percent above the March 2011 estimate of 574,000. Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000, lower than the 705,000 estimate. This is 5.8 percent below the revised February estimate of 694,000, but is 10.3 percent above the March 2011 rate of 593,000. Housing starts and building permits are seen as a leading indicator for the health of the US housing market. An increase in housing starts and building permits implies a healthy housing market, and because of the multiplier effect, housing has a significant impact on the rest of the economy.