Housing starts.

In plain English

The Census Bureau reports housing starts alongside building permits and completions, counting the point at which excavation begins for the footings of a new housing unit. Permits lead starts, and starts lead completions, so the three together map the construction pipeline. The series is highly sensitive to interest rates, because both builders and buyers borrow. It is volatile month to month and gets revised, so analysts look at multi-month averages. Each start pulls through spending on materials, labor, appliances, and furnishings, which is why it carries more weight than its size alone suggests.

01Why it matters

Housing construction responds to interest rates faster than almost any other part of the economy, so starts often turn down early in a tightening cycle and turn back up early in a recovery.

02The math, step by step

Say starts run at an annual rate of 1,450,000 units and fall to 1,260,000 over six months. That is a drop of 190,000 units, about 13 percent. At a rough $150,000 of construction spending per unit, that is roughly $28 billion of annualized activity.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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