An Uptick in Housing Starts Matters to Buyers

May 3, 2017

Your home buyers may want to look more closely at the housing starts numbers, even if they don’t intend to buy new.

Housing starts, or the number of new homes that builders have begun construction on, tend to follow a seasonal pattern—increasing in the spring, peaking in the summer, receding in the fall, and dropping to their lowest levels in the winter.

An increase in housing starts should make for good news for home buyers.

“Housing starts, when they are completed, add supply [and in turn] reduce upward pressure on new-home prices and may even reduce them,” says Andres Carbacho-Burgos, a senior economist at Moody’s Analytics.

Therefore, even if buyers aren’t buying new, they can still benefit from a healthy level of housing starts, says Danielle Hale, managing director of housing research at the National Association of REALTORS®. A high number of homes, whether old or new, will decrease prices for all homes, she notes.

Housing starts have been in gradual recovery mode the last few years. In 2016, starts were at 1.23 million units.

“We’re relatively optimistic” for 2017, says Carbacho-Burgos. “By the end of 2017, we expect housing starts to be closer to 1.7 million,” a 10 percent increase from a year earlier.

Source: “What Are Housing Starts, and Why Should Home Buyers Care?”® (May 1, 2017)