What is housing starts?

Housing starts measure the number of new housing units whose construction begins in a given period, counted when excavation for the footings or foundation begins. All the units in a multifamily building count as started at that point. Published monthly by the U.S. Census Bureau, housing starts are a leading economic indicator — they signal builder confidence, future housing supply, and construction employment trends.

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Key facts

  • Housing starts averaged approximately 1.3-1.5 million annualized units from 2020-2025, below the estimated 1.6-1.8 million needed annually to close the national housing shortage.
  • Housing starts collapsed from 2.27 million in January 2006 to 478,000 in April 2009, both at seasonally adjusted annual rates.
  • The decade of underbuilding from 2009-2019 (averaging roughly 1.0 million starts vs. 1.5 million needed) is the primary structural cause of today's housing shortage.
  • Housing starts are divided into single-family (typically 60-70% of total) and multi-family (apartments/condos, 30-40%). Multi-family starts have increased as single-family affordability declined.
  • Building permits — filed before construction begins — function as a leading indicator for starts, providing 1-2 months of advance signal about construction pipeline activity.

How Housing Starts Data Works

The Census Bureau publishes housing starts monthly as part of the New Residential Construction report. The data includes three sequential metrics:

  • Building permits: Filed with local authorities before construction. Leading indicator for starts by 1-2 months.
  • Housing starts: Counted when foundation excavation begins. The most-watched figure.
  • Housing completions: Counted when a unit is ready for occupancy. Lags starts by 6-12 months for single-family, longer for multi-family.

Headline figures are reported as seasonally adjusted annual rates (SAAR): the monthly pace, adjusted for the season and projected over a full year. This allows comparison across months despite seasonal variation (construction activity drops significantly in winter months in northern states).

Why Housing Starts Matter

Housing starts function as both an economic indicator and a supply predictor:

  • Economic leading indicator: Construction is labor-intensive and generates downstream demand for materials, appliances, and services. A decline in starts often precedes recessions. The Conference Board includes building permits for new private housing units in its US Leading Economic Index.
  • Supply pipeline: Today's starts become tomorrow's inventory. A sustained shortfall in starts relative to household formation creates the supply deficit that drives affordability deterioration.
  • Builder confidence proxy: Builders only start projects when they expect sufficient demand and manageable costs. Falling starts signal that builders see weakening demand or rising input costs.

The Underbuilding Problem

After the 2008 crisis, homebuilders — burned by massive losses — cut production dramatically and remained cautious for years. From 2009 to 2019, annual starts averaged roughly 1.0 million, well below the estimated 1.5 million needed to match household formation and replace aging stock. This created a cumulative deficit of 3-5 million units.

The shortage is a primary driver of the affordability crisis the ADI tracks. When new supply can't keep pace with demand, prices rise faster than incomes, stretching household budgets and depleting the financial buffers that protect against shocks. The ADI's Debt Burden and Safety Net & Buffer domains capture the downstream effects of this structural underbuilding.

Questions about housing starts

How many housing starts are needed annually?

Estimates range from 1.5-1.8 million annually to match household formation (roughly 1.2 million new households per year) plus replacement of aging housing stock. Housing starts were 1.22 million at a seasonally adjusted annual rate in September 2026.

What do housing starts tell us about the economy?

Housing starts are a leading economic indicator. Declining starts often precede recessions by 6-12 months, as builders reduce activity when they sense weakening demand. Rising starts signal builder confidence and future economic activity in construction, materials, and related services.

Why did housing starts crash after 2008?

Builders cut production because demand evaporated (foreclosures flooded the market with cheap existing homes), financing dried up, and land values collapsed. Many homebuilders went bankrupt. The industry didn't recover to pre-crisis production levels for over a decade.

What is the difference between housing starts and building permits?

Building permits are filed with local authorities before construction begins. Housing starts are counted when foundation excavation actually begins. Permits lead starts by 1-2 months and serve as a forward-looking indicator of construction pipeline activity.

Are enough homes being built now?

Not yet. Housing starts were 1.22 million at a seasonally adjusted annual rate in September 2026. At current rates, closing the gap would take 10-15+ years.

Related terms

  • Housing InventoryThe number of homes available for sale, measured in months of supply. Balanced: 4-6 months. Below 4 = seller's market. Above 6 = buyer's market.
  • Housing AffordabilityA measure of how housing costs compare with household income.
  • Median Home PriceThe middle sale price when home sale prices are ordered from lowest to highest.
  • Buyer's MarketWhen housing supply exceeds demand (above 6 months of inventory), giving buyers negotiating leverage on price and terms.
  • Seller's MarketWhen housing demand exceeds supply (below 4 months of inventory), giving sellers leverage to command higher prices and favorable terms.
  • Housing BubbleRapid home price appreciation unsupported by fundamentals like incomes and rents. When the bubble bursts, prices fall sharply and overleveraged homeowners default.
  • Housing Cost BurdenSpending more than 30% of household income on housing costs, a measure the Census Bureau uses; more than 50% is severely cost burdened.
  • Home Price Index (HPI)A measure of how home prices change over time across many sales, such as the FHFA House Price Index; an index reading is a change from a base period, not a price.

Sources and method

We write with assistance from AI tools. Figures come from the data and sources named on this page.