Housing starts reflect the strength of the US economy because, simply put, new construction signals more jobs, higher wages, and plenty of loans to fund businesses and other efforts.

In 2005, when the economy was booming, housing starts peaked at 2.068 million units. in 2009, in the depths of the Great Recession, housing starts fell to 554,000 units. Since then, housing starts have been on an upward trajectory - until the arrival of the COVID-19 pandemic. in April 2020, housing starts hit a five-year low of 938,000 units. Now, we see housing starts hovering at 1.42 million units.

Although housing starts data is released around the 17th of each month, experts warn against reading too much into the month-to-month fluctuations, as housing starts are closely linked to ...... weather is closely linked. After all, it is much easier to build houses when nature cooperates.

As a result, housing starts follow a seasonal pattern that tends to rise in the spring, peak in the summer, ebb in the autumn and fall to their lowest levels in the winter. This is why analyses usually compare housing starts in any given month to the same month a year ago, rather than to the previous month.

What do housing starts mean for homebuyers?

An increase in housing starts is good news for homebuyers, especially for the one-third of people who say they want to buy a brand new home. For these people, they will have more choice and potentially lower prices.

According to global economist and former senior economist at Moody's Analytics, Andres Carbacho Burgos, "Housing starts, once completed, will increase supply, [in turn] reducing upward pressure on new home prices and perhaps even lowering them."

Danielle Hale, chief economist at Realtor.com, notes that people looking to buy existing (or previously lived in) homes also benefit from healthy housing starts. Here's why: The large number of homes, both new and old, drives down the price of all homes, not just shiny new ones.

Remember, "Housing starts paint a broad picture of the state of the homebuilding market," says Hale. In other words, not all regions and markets will feel the same impact.

"Housing starts are likely to be concentrated at the higher end of the housing spectrum, which will mean that only the upper end of the housing market will be affected," explains Carbacho-Burgos.

Geography also plays a role. According to Carbacho-Burgos, housing starts are particularly strong in large metropolitan areas in the South (think Charlotte, North Carolina, Nashville, Tennessee or Austin, Texas), meaning that homebuyers looking for a variety of new home options or low prices may want to consider moving to those areas.

"At the end of the day," says Dietz, "all real estate is local. So be sure to research your particular area using online tools like realtor.com/local, where you can find average home sale prices and other information that will help guide your search.