| Trading the Building Permits Number |
Building Permits: A Glimpse Into the Future Health of the Housing Market Once a month, the U.S. Census Bureau gives us a glimpse into the future health of the housing market by releasing it Building Permits numbers. Traders love this information because the number of building permits issued impacts the building industry for months to come.  The more permits are issued, the more homes will be built, the more appliances and furniture will be purchased and the more construction workers will be employed. The fewer permits are issued, the fewer homes will be built, the fewer appliances and furniture will be purchased and the fewer construction workers will be employed. Of course, there are certainly other factors you should be looking at when determining the future health of the home building sector so Don't Read the News in a Vacuum. The Building Permits number is an annualized number of all of the residential building permits that were issued during the previous month. In other words, the Census Bureau determines how many building permits were issued during the previous month and multiplies that number by 12 Now, the Census Bureau does not go around and add up every single permit that was issued across the United States to get this number. Instead, it conducts a sample survey and extrapolates the data from the survey. With that in mind, the Census Bureau states "It may take 3 months to establish an underlying trend for building permit authorizations." So be wary of jumping the gun just because you see one good, or one bad, announcement. You can see the most recent Building Permits report here. Home Builder Stocks to Watch The Building Permits number is especially important for shareholders in the nations largest home builders. When you see the Building Permits number rising, it is a good sign for home builders and will typically have a positive impact on the price of their stocks. When you see the Building Permits number falling, it is a bad sign for home builder and will typically have a negative impact on the price of their stocks. Here are a few of the largest home builders you should keep an eye on: - The Ryland Group, Inc. (NYSE: RYL) - Meritage Homes Corporation (NYSE: MTH) - Standard Pacific Corp. (NYSE: SPF) - Hovnanian Enterprises, Inc. (NYSE: HOV)
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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved." |
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