Relationship Between Building Permits,
Housing Starts, and Housing Completions
We are frequently asked why the building permits, housing starts, and housing completions
series do not match over time, both in total and by category. In response, we thought it would be
helpful to list the main factors causing differences and to estimate the contribution of each based
on data from 1999 to 2004.
Background -- How the Surveys Work
New housing construction data are collected in two surveys:
The Building Permits Survey (BPS) produces estimates of the number of permits issued for
new housing units each month. This is done through a mail survey of a sample of permit offices.
Permit offices not in the monthly sample report annual numbers at the end of each year.
Monthly data for States, Regions, and the U.S. are weighted sample based estimates reflecting
the total building permit universe.
The Survey of Construction (SOC) produces monthly estimates of housing starts and
completions. Census Bureau “field representatives” sample individual permits within a sample
of permit offices. Then the builders or owners who took out the sampled permits are interviewed
to obtain start and completion dates along with sale dates and characteristics such as size and
number of bedrooms. In addition, within a sample of land areas where building permits are not
required, field representatives drive all roads looking for new residential construction activity.
Factors Affecting the Permit-Start-Completion Relationships
1. Starts and completions in non-permit areas
Housing starts and completions estimates cover the entire United States, not just areas requiring
building permits. The number of housing units built in non-permit areas is about 2.5 percent of
the total. Nearly all are single-family houses.
(Note that the number of jurisdictions (or “places”) requiring building permits increases over
time as non-permit places become permit-issuing. The Census Bureau’s universe of permit
offices was increased in 2005 from 19,000 to 20,000 places.)
2. Changes after the issuance of permits
Many times, changes to the status of buildings take place after the permit has been issued,
affecting the permit to start/completion relationship.
Reclassification -- Townhouses are classified as single-family houses according to Census
definitions, however, permit offices frequently classify them as multifamily structures. In SOC,
we often sample permits for multifamily buildings that our field representatives later determine
are townhouses. This reclassification results in significantly more single-family starts and
completions (and less multifamily) than are shown in the permit data.
Abandons -- Construction is sometimes abandoned after permits are issued but before
construction is started, affecting the permit-to-start relationship, or after construction is started,
affecting the start-to-completion relationship. Abandon rates can fluctuate over time due to
conditions in the economy.
Design changes -- Builders also can make design changes after the issuance of the original
permits. This is more common with the construction of apartment buildings where the final
number of units may be more or less than originally planned.
Misclassification -- Permit offices sometimes incorrectly classify permits as new residential
construction when the permits are actually for home improvements, the setting up of mobile
homes, or the construction of non-residential buildings. Census field representatives will
subsequently “out-of-scope” these permits if sampled in SOC.
3. Permit revisions not applied to starts and completions
Part of the calculation of housing starts and completions involves a procedure where estimates of
monthly permit authorizations based on SOC sample cases are ratio-adjusted to the more
complete estimate of permits based on the monthly BPS. However, monthly permit estimates
from the BPS are subsequently revised at the end of each year when results of the annual survey
are incorporated. Under current procedures, the final revised permit numbers are not used in the
calculation of starts and completions. Over the past few years, final permit estimates have been
about 1.5 percent higher than the preliminary permit estimates used to develop the starts and
completions data. This difference should be smaller in 2005 as we have redesigned the monthly
BPS sample, which was 10 years old in 2004.
4. Change in inventories between time periods
In comparing the numbers of permits, starts, and completions over time, changes in the level of
two inventory figures must be taken into account. The number of units “authorized but not
started” affects the relationship between permits and starts, and the number of housing units
“still under construction” affects the relationship between starts and completions.
Summary of Findings
The following estimates of the average effect of each factor on the relationship of permits, starts,
and completions are based on a summary of data from 1999 to 2004. The estimates were derived
by either comparing published estimates for recent years or by tabulating unpublished data. For
the most part, they are rough approximations, and measurements of their sampling errors have
not been calculated. Please note that the estimates shown here are based on sample surveys and
subject to sampling variability as well as nonsampling error.
Starts versus Permits
Total units: Starts were 2.5 percent less than permits
Contributing factors:
Housing starts in non-permit areas +2.5%
Permits abandoned before start -1.5%
Design change and misclassification -1.0%
Permit revisions not applied to starts -1.5%
Change in inventory of authorized but not started -1.0%
Single-family units: Starts were 2.5 percent greater than permits
Contributing factors:
Housing starts in non-permit areas +3.0%
Reclassification of units from multifamily +4.0%
Permits abandoned before start -2.0%
Design change and misclassification -1.0%
Permit revisions not applied to starts -1.0%
Change in inventory of authorized but not started -0.5%
Multifamily units: Starts were 22.5 percent less than permits
Contributing factors:
Housing starts in non-permit areas +0.5%
Reclassification of units to single-family -15.5%
Permits abandoned before start -1.5%
Design change and misclassification -3.0%
Permit revisions not applied to starts -2.0%
Change in inventory of authorized but not started -1.0%
Completions versus Starts
Total units: Completions were 4.0 percent less than starts
Contributing factors:
Units abandoned after start -0.5%
Difference in number of units counted as a start -1.0%
Change in inventory of units under construction -2.5%
Single-family units: Completions were 3.5 percent less than starts
Contributing factors:
Units abandoned after start -0.5%
Difference in number of units counted as a start -0.5%
Change in inventory of units under construction -2.5%
Multifamily units: Completions were 7.5 percent less than starts
Contributing factors:
Units abandoned after start -0.5%
Difference in number of units counted as a start -3.0%
Change in inventory of units under construction -4.0%
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