HOUSING STARTS AND BUILDING PERMITS

Definition

Housing starts and building permits is another economic indicator that will commonly be used used by a savvy forex broker or trader in an effort to predict market movement.

The report includes an estimation of the number of housing units on which construction was started. Construction is considered to have been started when the footings or foundations have been excavated or when the first shovel of dirt has broken ground. The stats are grouped into single-family and multifamily (two or more) units. For example, starting construction on a 200-unit apartment building is counted as 200 starts.

Building permits are taken out before excavation; however, not all areas of the country require permits, so while permits lead starts, the number of starts generally exceeds the number of permits over time.

Individuals involved with forex trading can read monthly national reports broken down by region. Analyzing regional data is recommended because weather changes and/or natural disasters can lead to a high level of volatility that can skew the overall report.

Forex Trading Importance

Housing starts and building permits have a moderate affect on the market and on FX trading. Large swings are often seen in response to changes in long-term interest rates, especially mortgages. Even though the GDP is only composed of 4% residential investment, changes to the number of housing starts and building permits often cause proportionally higher changes to the GDP. Forex brokers and traders consider these statistics to be a good indicator of the market’s direction.

Housing Starts Source

Numbers are compiled by the U.S. Department of Commerce, Bureau of the Census