Housing starts

‘Housing starts' refers to the number of new residential buildings being built in a given period of time. Stock markets are very quick to react to significant changes in the number of housing starts because they are yet another indicator of the overall state of the economy.

Canadian housing starts are reported by the Canada Mortgage and Housing Corporation (CMHC). Statistics Canada also publishes this data from CMHC.

U.S. housing starts are reported by the U.S. Census Bureau each month.

The number of housing starts generally indicates the willingness and financial ability of people to buy a new home, which in turn gives stock markets an indication of how healthy the economy is. During the financial crisis of 2008 and 2009, for example, the number of U.S. housing starts plunged dramatically.

A drop in housing starts suggests that people are hesitant or unable to buy homes for a number of reasons: the economy is slowing down, unemployment is rising, economic uncertainty is growing, credit is unavailable, or house prices have risen above the reach of many consumers.

The price of housing in Canada can be followed using the Teranet House Price Index, while U.S. housing prices are tracked by the rating agency Standard and Poors, which publishes the monthly Case-Shiller Home Price Indices.