How can you use Housing Starts data in Technical Analysis?

1 What are housing starts?

Housing starts are a monthly report released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) that tracks the number of new privately owned residential buildings that have begun construction in the U.S. The report includes data on single-family homes, apartments, condos, and townhouses, as well as regional breakdowns and revisions. Housing starts are considered a leading indicator of economic activity, as they reflect consumer confidence, income, employment, and credit availability. They also influence the demand and supply of housing, which affects the prices of real estate and related assets, such as mortgages, homebuilders, materials, and utilities.

2 How to access housing starts data?

Housing starts data are usually released around the middle of each month, covering the previous month's activity. You can access the latest and historical data from the official websites of the Census Bureau and HUD, as well as from various online sources, such as trading platforms, news outlets, and economic calendars. You can also subscribe to email alerts or RSS feeds to get notified of the data releases. You can view the data in different formats, such as tables, charts, or maps, and compare them with the consensus estimates and previous figures.

3 How to interpret housing starts data?

Housing starts data can be interpreted in different ways, depending on your perspective and objectives. Generally, a higher than expected number of housing starts indicates a strong and expanding economy, a high demand for housing, and a positive outlook for the real estate sector and related industries. This can boost the confidence and sentiment of consumers, investors, and businesses, and support the growth of the gross domestic product (GDP) and the income and employment levels. A lower than expected number of housing starts suggests a weak and contracting economy, a low demand for housing, and a negative outlook for the real estate sector and related industries. This can dampen the confidence and sentiment of consumers, investors, and businesses, and hinder the growth of the GDP and the income and employment levels.

4 How to use housing starts data in technical analysis?

Housing starts data can be used in technical analysis to identify trends, patterns, signals, and levels in the price movements of various financial instruments that are influenced by the housing market and the economic conditions. For instance, you can analyze the correlation between housing starts and the prices of real estate investment trusts (REITs), homebuilders, materials, and utilities stocks, exchange-traded funds (ETFs), and indexes. Additionally, you can monitor the impact of housing starts on the interest rates and the bond market. Moreover, you can evaluate the effect of housing starts on the currency market to identify key levels and zones in the exchange rates of the U.S. dollar and other major currencies. By using technical tools such as moving averages, trendlines, channels, support and resistance, Fibonacci retracements, and pivot points, you can look for opportunities to trade or hedge your exposure to housing market risks, as well as anticipate potential movements or fluctuations.

5 What are the limitations of housing starts data?

When using housing starts data for technical analysis, it’s important to be aware of their limitations and challenges. Housing starts data are volatile and subject to revisions, which can affect the accuracy and reliability of the data. They are also lagging and seasonal, which means they reflect past activity and are influenced by varying factors throughout the year. Moreover, housing starts data are not the only factor that affects the housing market and the economy; other relevant and complementary data and indicators should also be considered, such as building permits, new home sales, existing home sales, home prices, mortgage rates, consumer confidence, GDP, inflation, and unemployment. Additionally, news and events that can affect the sentiment of market participants should be paid attention to in order to anticipate sudden or unexpected shifts or shocks in the market dynamics.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?