Housing starts

Housing starts

Real estate market of the USA plays a great role for its economy and in the results impacts on currency rate. There are two key reports for housing building among residents of the country, one of which represents the number of new constructions of houses - Housing Starts. This is a fundamental indicator that provides the amount of houses in process of construction. This index consists of three parts: single-family houses, townhouses or small condos and apartment buildings with five or more units. Every apartment is considered as a single unit. For example, multistorey house with 50 apartments is accounted as 50 new house units. It is also noteworthy that single-family houses amount to about 85% from total amount of new houses.

Housing starts release is published simultaneous with another equally important report - Building Permits. The difference between them is that Housing Starts shows number of houses that are already under construction (the foundation is laid), whereas Building Permits provides number of houses that receive permission for construction. As a matter of fact, Housing Starts convey the paces of construction.

The data on housing starts is reported by The Census Bureau of the Department of Commerce at 10-00 a.m (EST) or 6 p.m (MSK) in the middle of every month (usually it is 16 – 18) for the recent month.

Implications for the Forex market

This figure asserts an average impact on Forex market. Housing starts report provides the number of new houses started in a recent month and calculation of this number is adjusted for the year. The figures above expectations are considered as positive for USD, whereas figures below expected – as negative.

Increase of New Houses Starts boosts construction and tells about growth of income of people together with level of further consumption (furniture, appliances etc.) that finally speaks for a healthy economy. But it should be mentioned that data is subject to season impact (weather). Besides, the indicator heavily depends on the interest rate, because more often construction requires loan. Decline of interest rates is positive for construction, whereas growth of interest rates can lead to negative results in this field.