Housing Starts and Building Permits

What is the future direction of the economy?  Look at housing starts.

Housing is sensitive to interest rates.  High interest rates discourage investment.  Many trades are needed to build a home such as plumbers, electricians, painters, and the like.  Economists estimate that for every 1,000 single-family homes under construction, about 2,500 full-time jobs and nearly $100 million in wages are generated.[1]  When home building also creates consumer demand for carpet, home electronics, appliances, and art.

According to AmosWEB.com, housing starts are 717,000 Up 2.6% from March. This is a good sign for most people except bond holders.


Bond holders know that a robust economy will put inflationary pressure on their long-term fixed investments eroding the earnings.  


The stock market will respond positively to an increase in housing starts and negatively to a decrease.  A vibrant increase in housing might signal higher rates in the future to curb inflation.  


Higher interest rates might cause the USD to appreciate.  


[1] Baumohl, Bernard, The Secrets of Economic Indicators, page 170.