Housing Starts Rocket

Housing Starts Rocket

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

A key report that reflects the strength of the housing market is the monthly Housing Starts report released jointly by the U.S. Census Bureau, U.S. Department of Commerce and U.S. Department of Housing & Urban Development.  The Housing Starts report includes two pieces of data: starts and permits.  A housing start is counted when construction begins on a new single or multifamily property.  A permit is counted when a permit is issued by a local government to a property owner or builder to begin construction on a new single or multifamily property. Because construction typically begins soon after a new permit is issued, housing starts and permits are typically highly correlated.

After a long and relatively lackluster winter, housing starts shot up like a rocket to start Spring. The Housing Starts report issued in May 2015 showed the strongest results in almost eight years.  Housing starts jumped 20.2% to 1.135 million annualized units in April after increasing a meager 2.0% in March.  The housing starts figure exceeded expectations by approximately 15,000 units.  The jump in housing starts was driven by all property types, with single-family residence starts up 16.7% and multi-family residences up a whopping 27.2%.

Housing permits also shot up, increasing 10.1% in April to 1.143 million annualized units, as compared to a 5.7% decline in March.  The permit figure surpassed analyst expectations by approximately 23,000 units.  Up 20.5%, the growth in multi-family permits significantly outpaced single-family permits, which increased 3.7%.  The report showed strength across all geographies, led by the West and the Northeast. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The robust Housing Starts report is welcome news for the real estate and mortgage markets.  After several months of sluggish results due to weather-related challenges, the May Housing Starts report shows that the housing market is roaring back to start Spring.  An increase in starts and permits is welcome news for potential home buyers as it means that builders will be bringing more housing supply onto the market as starts turn into homes for sale in the coming months.  It is important to note that many multi-family units will be made available for rent instead of for sale but the tremendous overall increase in starts and permits shows that home builders believe there is growing demand for new housing.  With more supply coming onto the market over the next couple of months, as indicated by the housing starts report, now is a good time to start the mortgage process.  If you are a first-time buyer, use our First-Time Home Buyer Mortgage Cheat Sheet to learn about the key steps in the mortgage process.  You can also use our Mortgage Selector Calculator to determine the what size mortgage you can afford and the mortgage program that is right for you. And use our INTEREST RATES function to compare rates and fees for lenders in your area to find the mortgage that is right for you.

The FREEandCLEAR Mortgage Expert


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About the author
Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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