The housing starts indicator falls under which stage of the housing process?

Answer 1

Housing starts are just that, the start of building a house. A developer or contractor usually has to apply for a permit to build. When that permit is approved the contractor can start to build the house anytime after that. Since the contractor has money into the land and some of the construction materials, they usually like to finish them in a timely fashion (typically 2-3 months) so that they can sell, recoup their investment and hopefully make a profit.

Housing starts are a leading indicator for the supply (which should be balanced with demand) of new homes as they will be finished and available or sold in two or three months.

Lots of housing starts also indicate a higher demand for wood, sheetrock, shingles, appliances, paint, etc. Low numbers for housing starts indicate a weak real estate market and potential weakness for the industries that supply the builders.