CA: Housing Starts

Tue Dec 08 07:15:00 CST 2015

Consensus Actual Previous Revised
Level 198,000AR 211,916AR 198,065AR 197,712AR

Housing starts jumped in November from the previous month. The standalone monthly saar rose to 211,916 units in November from a downwardly revised 197,712 units in October. The headline increase reflected a 7.7 percent advance in urban starts to 195,121 units within which multiples were 13.2 percent higher at 137,898 units and singles 3.6 percent lower at 57,223 units.

Regionally starts increased in the Prairies, Ontario and Atlantic Canada but decreased in British Columbia and Québec.

Rural starts were estimated at a seasonally adjusted annual rate of 16,795 units.

The 6-month moving average rose for a seventh consecutive month to finish at 208,401 units in November versus a slightly revised 206,125 units in October.

Housing starts is the annualized number of new residential buildings that began construction during the previous month.

Housing starts are a leading indicator of economic health because building construction produces a wide-reaching ripple effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy.

Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic "ripple effect" can be substantial. Since the economic backdrop is the most pervasive influence on financial markets, housing starts have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the housing starts data carry valuable clues for the stocks of home builders, mortgage lenders, and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.