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NEW RESIDENTIAL CONSTRUCTIONTable of ContentsI. PurposeII. Definitions III. Source of Data and
Survey Questionnaires V. Sample Design VI. Compilation of Data
VII. Reliability of
Data VIII. Seasonal
Adjustment I. PURPOSEThe purpose of the New Residential Construction press release is to provide statistics on the construction of new privately-owned residential structures in the United States. Data included in the press release are (1) the number of new housing units authorized by building permits; (2) the number of housing units authorized to be built, but not yet started; (3) the number of housing units started; (4) the number of housing units under construction; and (5) the number of housing units completed. The data relate to new housing units intended for occupancy and maintained by the occupants. They exclude hotels, motels, and group residential structures such as nursing homes and college dormitories. Also excluded are "HUD-code" manufactured (mobile) home units.II. DEFINITIONSNew Residential ConstructionThe category of statistics called "New Residential Construction" consists of data on the five phases of a residential construction project. This is housing units authorized to be built by a building or zoning permit; housing units authorized to be built, but not yet started; housing units started; housing units under construction; and housing units completed. New residential construction statistics exclude group quarters (such as dormitories and rooming houses), transient accommodations (such as transient hotels, motels, and tourist courts), "HUD-code" manufactured (mobile) homes, moved or relocated buildings, and housing units created in an existing residential or nonresidential structure. However, in a new building combining residential and nonresidential floor areas, every effort is made to include the residential units in these statistics, even though the primary function of the entire building is for nonresidential purposes. These statistics only include privately-owned buildings. Publicly owned housing units are excluded from the statistics. Units in structures built by private developers with partial public subsidies or which are for sale upon completion to local public housing authorities under the HUD ``Turnkey'' program are all classified as private housing.Housing UnitA housing unit, as defined for purposes of this report, is a house, an apartment, a group of rooms or a single room intended for occupancy as separate living quarters. Separate living quarters are those in which the occupants live separately from any other individuals in the building and which have a direct access from the outside of the building or through a common hall. In accordance with this definition, each apartment unit in an apartment building is counted as one housing unit. Housing units, as distinguished from "HUD-code" manufactured (mobile) homes, include conventional ``site-built'' units, prefabricated, panelized, componentized, sectional, and modular units. Housing unit statistics in these tables exclude group quarters (such as dormitories and rooming houses), transient accommodations (such as transient hotels, motels, and tourist courts), "HUD-code" manufactured (mobile) homes, moved or relocated units, and housing units created in an existing residential or nonresidential structure."HUD-code" Manufactured (mobile) HomesA manufactured home is defined as a movable dwelling, 8 feet or more wide and 40 feet or more long, designed to be towed on its own chassis, with transportation gear integral to the unit when it leaves the factory, and without need of a permanent foundation. These homes are built in accordance with the U.S. Department of Housing and Urban Development (HUD) building code. Since these units are typically not covered by the building permits issued in local municipalities, they are excluded from the New Residential Construction statistics.Building PermitsStatistics on housing units authorized by building permits include housing units issued in local permit-issuing jurisdictions by a building or zoning permit. Not all areas of the country require a building or zoning permit. The statistics only represent those areas that do require a permit. Current surveys indicate that construction is undertaken for all but a very small percentage of housing units authorized by building permits. A major portion typically get under way during the month of permit issuance and most of the remainder begin within the three following months. Because of this lag, the housing unit authorization statistics do not represent the number of units actually put into construction for the period shown, and should therefore not be directly interpreted as "housing starts."Housing Units Authorized, but Not StartedEstimates of housing units authorized by a building or zoning permit, but not yet started, are shown in the "authorized, not started" data series. These only represent the areas of the country that require a building or zoning permit.Housing StartsThe start of construction is when excavation begins for the footings or foundation of a building. All housing units in a multifamily building are defined as being started when excavation for the building has begun. Beginning with statistics for September 1992, estimates of housing starts include units in residential structures being totally rebuilt on an existing foundation. Housing starts are estimated for all areas of the United States, regardless of whether permits are required.Housing Units Under ConstructionEstimates of housing units started, but not yet completed, are shown in the "under construction" data series. Housing units under construction are estimated for all areas of the United States, regardless of whether permits are required.Housing CompletionsOne-unit structures are defined as completed when all finished flooring has been installed. If the building is occupied before all construction is finished, it is classified as completed at the time of occupancy. In buildings with two or more housing units, all the units in the building are counted as completed when 50 percent or more of the units are occupied or available for occupancy. Housing completions are estimated for all areas of the United States, regardless of whether permits are required.Residential BuildingA residential building is a building consisting primarily of housing units. In a new building combining residential and nonresidential floor areas, every effort is made to include the residential units in these statistics, even though the primary function of the entire building is for nonresidential purposes.RegionsThe standard census geographic regions are used in the tables of this report. Click here to see a map (in PDF format) showing the regional boundaries. States contained in each region are as follows:
denotes a file in Adobe’s Portable Document Format.
To view the file, you will need the
Adobe® Acrobat® Reader
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Metropolitan AreasThe titles and definitions for Metropolitan Areas (MAs),which are made up of Metropolitan Core-Based Statistical Areas (CBSAs), conform to those defined by the Office of Management and Budget, Executive Office of the President, as of December 2003. Click here to see more information on metropolitan areas.Type of Structure, including Attached and Detached Housing UnitsThe statistics, by type of structure, refer to the structural characteristics of the building. The one-unit structure category includes fully detached, semidetached (semiattached, side-by-side), rowhouses, and townhouses. In the case of attached units, each must be separated from the adjacent unit by a ground-to-roof wall in order to be classified as a one-unit structure. Also, these units must not share heating/air-conditioning systems or interstructural public utilities, such as water supply, power supply, or sewage disposal lines. Units built one on top of another and those built side-by-side which do not have a ground-to-roof wall and/or have common facilities (i.e., attic, basement, heating plant, plumbing, etc.) are classified by the number of units in the structure (i.e., two-unit structure, three-unit structure, etc.). In these statistics, apartment buildings are defined as buildings containing five units or more. Apartments in a conventional-type apartment building may share a common basement, heating plant, stairs, entrance halls, and water supply and sewage disposal facilities. Townhouse apartments, though attached, are not separated by a ground-to-roof wall and/or share some interstructural facilities, such as water supply, sewage disposal, etc.OwnershipOwnership is not the criterion for structural classifications in this report. A condominium apartment building is classified with apartment buildings in structures with five units or more, despite the fact that each unit is individually owned. Condominium townhouses may be in the one-unit category if each unit is separated from its neighbor by a ground-to-roof wall (no commonly shared interstructural facilities), or in the multiunit building categories if they are not separated from each other by a ground-to-roof wall (share interstructural facilities).III. SOURCE OF DATAIII.a. Housing Units Authorized by Building PermitsStatistics are based upon reports submitted by local building permit officials in response to a mail survey. Approximately 9,000 of the 20,000 permit issuing places in the United States are surveyed monthly and the remainder are surveyed annually. The data are obtained using Form C-404, "Report of New Privately-Owned Residential Building or Zoning Permits Issued." When a report is not received, missing data are either (1) obtained from the Survey of Use of Permits (SUP) which is used to collect information on housing starts, or (2) imputed. Data for SUP are available only for about 900 places for which Census Bureau field representatives list permits (see more information below.) Imputations are based on the assumption that the ratio of current month authorizations to those of a year ago should be the same for reporting and nonreporting places.III.b. Housing Units Authorized, but Not Started; Housing Starts; Housing Units Under Construction; and Housing CompletionsEstimates of Housing Units Authorized, but Not Started; Housing Starts; Housing Units Under Construction; and Housing Completions are all obtained from the Survey of Construction (SOC). SOC is comprised of two parts: (1) Survey of Use of Permits (SUP) which estimates the amount of new construction in areas that require a building permit and (2) Nonpermit Survey (NP) which estimates the amount of new construction in areas that do not require a building permit. Less than 3 percent of all new construction takes place in nonpermit areas. Data from both parts of SOC are collected by Census field representatives. For SUP they visit a sample of permit offices and select a sample of permits issued for new housing. These permits are then followed through to see when they are started, completed and sold if the one-family unit was built to be sold. Each project is also surveyed to collect information on characteristics of the structure. For NP, roads in sampled nonpermit land areas are driven at least once every three months to see if there is any new construction. Once new residential construction is found, it is followed up the same as in SUP.The Census field representatives use interviewing software on
laptop computers
to collect the data. Facsimiles of the computer-based questionnaires
are provided
to respondents to familiarize them with the survey. These facsimiles
show
the questions that are asked for housing units in single-family
buildings Form SOC-QI/SF.1,
in multiunit
buildings Form SOC-QI/MF.1 and
questions regarding the building permit office (BPO) procedures for handling building permits Form SOC-QBPO.1.
In addition,
the Census field representatives include an
introductory letter with the forms explaining the survey. IV. GEOGRAPHIC COVERAGEMost statistics in the New Residential Construction release are tabulated only for the United States and four Census Regions. The SOC does not have a large enough sample size to make state or local area estimates. The only series that is available at a smaller geographic area is the housing units authorized by building permits. Building permit data are collected from individual permit offices, most of which are municipalities; the remainder are counties, townships, or New England and Middle Atlantic-type towns. Since building permits are public records, local area data are available without any confidentiality problems. From local area data, estimates are tabulated for Counties, States, and Metropolitan Areas.For more geographic information, please refer to our
definitions of Regions and Metropolitan Areas. V. SAMPLE DESIGNV.a. Housing Units Authorized by Building PermitsV.a.1 Sample design beginning January 2005 is as follows:The monthly statistics shown for the United States, regions and states are derived from a sample of 9,000 permit-issuing places selected from a universe of 20,000 such places. We use Form C-411, "Survey of Residential Building or Zoning Permit Systems" to canvass all active governments in the United States. The Building Permits universe is updated by adding all places found that have established a new permit system. Selection of the sample was a multiple step process. All permit-issuing places in the 75 Metropolitan Areas (MAs) having the greatest number of housing units authorized in 2002 were selected with certainty. All permit-issuing places in states with a limited number of permit-issuing places were selected with certainty. Permit-issuing places having special data reporting arrangements were selected with certainty. The remaining places were stratified by state. Within a state, places were ordered by a weighted average of the numbers of housing units authorized in 2000, 2001, and 2002. Places with a large weighted average, varying by state, were selected with certainty. Other places were selected at the rate of 1 in 10. V.a.2 Sample design for 2004 and earlier is as follows:
V.b. Housing Units Authorized, but Not Started; Housing Starts; Housing Units Under Construction; Housing Completions; Housing Sales; and Characterisitics of New HousingV.b.1 Sample design beginning January 2005 is as follows:The Survey of Construction sample design consists of three stages: (1) a subsample of the 2004 Current Population Survey (CPS) primary sampling units (PSUs) - CPS PSUs are land areas (groups of counties, towns or townships within a state) that represent the entire United States; (2) selection of permit/non-permit areas; and (3) selection of permits. In the first stage, the 820 CPS primary sampling units were classified as self representing or non- self representing. If a PSU had a large population age 16 and over, or high permit activity, it was classified as self-representing; otherwise it was classified as non self-representing. There were 48 self-representing PSUs. The 772 non-self representing PSUs were grouped into 121 strata by Census division, permit activity, metropolitan status and population (non-institutional population age 16 and over based on the 2000 Census). One non-self representing PSU was selected per stratum using a procedure that maximized the overlap between the old and new sample of PSUs. Within the 169 strata, the second stage of sampling was performed separately for permit-issuing places and areas that do not need a permit to build, referred to as non-permit. The permit-issuing places were stratified by permit activity. Approximately 900 permit-issuing places were selected. The selection of the non-permit areas was based on the 2000 Census geography tract and block definitions. Within each state the land area was divided into blocks, which are components of tracts. Blocks were classified as permit and non-permit. The non-permit blocks were combined at the tract level, and these areas were stratified by Census 2000 housing unit population. Higher population areas had greater probabilities of selection. Approximately 80 areas were selected. The third stage of selection is performed monthly in the approximately 900 permit-issuing places and 80 non-permit areas. In permit-issuing places , field representatives list and select a sample of permits. Permits for the one to four unit buildings are sampled at an overall rate of 1 in 50. All permits for buildings with five or more units are included in the sample, except for rare cases where the workload for a field representative is excessive. If this occurs, a random sample of permits for the buildings with five or more units is taken. In non-permit areas, field representatives canvass the areas looking for housing units started, all of which are included in the sample. V.b.2 Sample design for 2004 and earlier is as follows:
Within each of these 169 areas, the sample was selected from two different sample frames: permit-issuing places and land areas not covered by building permit systems. Each permit-issuing place was assigned to one of six size classes based on a weighted average of 1978, 1981, and 1982 permit activity. The two most recent years available for the SOC redesign, 1981 and 1982, were unusual because of recession. Future activity was expected to return toward the pre-recession distribution. It was thought that averaging 1981 and 1982 with 1978 would include this tendency to return to the pre-recession distribution but also reflect a permanent change in the distribution of activity due to the changes in the economy. The activity levels were standardized by dividing by the US activity for each year because the activity levels were quite different in the three years. The permit places in each of the 169 areas were grouped into these six size classes and a systematic sample of places was selected from each size class. Places were selected at different sampling rates in each of the classes so that larger proportions of the places were selected from the larger size classes. For example, all places in the largest size classes fell into sample, but only an expected 1 in 40 of the places in the smallest size class fell into sample. Approximately 840 permit-issuing places were selected. Due to splits and mergers of local permit systems, there are now about 900 permit offices in the Survey of Construction. Monthly, Census field representatives sample permits from these 900 permit-issuing places. They select permits for one-to-four-unit buildings with probability proportional to the number of units at an overall rate of 1 in 40. All permits for buildings with five units or more are selected. Within each of the 169 areas, the land not covered by building permit systems, called nonpermit areas, was identified. Small land areas (1980 Census enumeration districts) in these nonpermit areas were grouped into two strata according to the 1980 population. Overall, 1 out of every 120 land areas was selected from the strata with the larger areas and 1 out of 600 was selected from the strata with the smaller areas. Monthly, census field representatives canvassed about 130 selected land areas looking for all housing units started. In January 1995, the area covered by building permit systems
was expanded to 19,000 permit-issuing places. Canvassing was stopped in
those selected land areas now represented by permit-issuing places.
Census field representatives continue to canvass about 70 land areas
still not covered by building permit systems. Due to the small amount
of new construction activity, many areas are now only canvassed once
every three months. V.c. Statement about the Possible Impact on New Home Prices and Characteristics due to the Survey of Construction Sample ChangeEffective with the January 2005 data release, the Survey of Construction implemented a new sample of building permit offices from which sampled houses are selected. The sample of permit offices was redesigned to reflect the location of building permit activity in the past few years, replacing the previous sample selected in 1985. The selection of the approximately 900 permit offices in the new sample was designed to optimize the precision of the housing starts estimates. No attempt was made to select offices representing geographic areas with similar housing prices and characteristics as the old sample. As a result, data users should use caution when analyzing year over year changes in housing prices and characteristics between 2004 and 2005. It may be possible, for example, that many jurisdictions in the 1985 sample are more built up now, remaining land may be more expensive, remaining lots may be smaller, etc. These jurisdictions may have been replaced in the new sample with more outlying areas that are now actively issuing building permits. In these locations land may be more abundant, lot sizes might be larger, and sales prices possibly lower. It is important to note that estimates from the old and new samples are both statistically correct. The actual values that we are trying to estimate fall within intervals that can be calculated from the sample data with known probabilities. For example, when we publish an estimate with a relative standard error (RSE) of 5%, there is a 90% chance that the true value is within "8% (statistically defined as 1.6 times the RSE) of the estimate. VI. COMPILATION OF DATAVI.a. Housing Units Authorized by Building PermitsSurvey forms received are edited for such items as units per building, cost per unit, cost per building, numbers too high or low, etc. Estimates are imputed for missing monthly reporters. Estimates are not imputed for annual reporters on a monthly basis, these are accounted for in the monthly sample based estimates by our weighting procedure.Monthly building permits data are available in four basic formats: State, Metropolitan Area (MA), County, and Place. Data are tabbed for the current month and for year-to-date. Year-to-date data include any late reports or corrections from prior months. (Summing the published monthly data will not generate the same estimate that we publish for year-to-date.) Monthly data are not revised except for the highest aggregates (US and region) after annual processing. State data includes division, region and US data. These are sample based estimates that represent the entire geographic area. MA tables show all MAs, but most do not include complete counts on a monthly basis. The MAs which are completely covered monthly include the 75 MAs having the greatest number of housing units authorized in 2002. The remaining are just the sum of monthly reporters with no estimate for annual reporters. Annual tables include estimates for all permit areas. Monthly county data are the sum of the places requested to report monthly in a county, and for counties not fully covered by monthly reporters, county totals will be incomplete. Annual county totals include estimates for all permit offices. Monthly place level data include municipalities requested to report monthly. Data for all permit-issuing municipalities are available annually. There is a follow-up for nonreporters in which calls are made to delinquent offices to obtain data or correct address information. At the end of the year a second form is mailed to delinquent offices. If an office is 1-4 months delinquent, a form is sent for each missing month, and if 5 or more months delinquent, an annual form is sent. Annual data are obtained by summing monthly data for monthly
reporters and using annual data for annual reporters. If both monthly
and annual data
exist, the annual data are used. If no annual data are received, but
there
were some months reported, the sum of the monthly reported and imputed
data
is used rather than the imputed annual data. Building permits data are
not
sample based on an annual basis, annual data are tabulated from the
entire
universe of building permit offices. VI.b. Housing Units Authorized, but Not Started; Housing Starts; Housing Units Under Construction; and Housing CompletionsEffective in April 2001, with revisions back to January 1999, changes were made to the methodology used to generate these estimates. The methodology used is described below. For a full explanation of the changes and an estimate of the effect on the estimates, click here.VI.b.1. Methodology Used Beginning With 1999 DataHousing Starts:The compilation of the housing starts series is a multistage process. First, an estimate is made monthly of the number of housing units for which building permits have been issued in all permit-issuing places as described above. Second, for each permit selected in the 900 permit-issuing places, an inquiry is made of the owner or the builder to determine in which month and year the unit(s) covered by the permit was (were) started. In case the units authorized by permits in a particular month are not started by the end of that month, follow-ups are made in successive months to find out when the units were actually started. Ratios are calculated (by type of structure) of the number of units authorized by permits, based on the Building Permits Survey to the number of units authorized by permits based on estimates generated from the 900 SOC permit offices; separate ratios are calculated for that month and the prior 11 months. The 13th through 18th month back are summed and a ratio is calculated and all months from 19 months back through 60 months (5 years) are summed to get another ratio. These ratios are then applied to the appropriate estimate of the number of units started, based on the 900 SOC permit offices, in the corresponding months or groups of months to provide ratio adjusted estimates of the number of units started for each month or group of months. Adjustments are made to account for those units started prior to permit authorization and for late reports. These adjustments are based on historical patterns of pre-permit starts and late data. No adjustment is made for units in permit areas built without a permit. The estimates for housing units started in permit-issuing places result from the procedures outlined above. Third, units identified as started in the monthly canvass of nonpermit areas are weighted appropriately to provide an estimate of total housing starts in areas not covered by building permit systems. Adding this estimate of starts in nonpermit areas to the estimate of starts in permit-issuing places results in an estimate of total private housing units started. This same methodology is also used for the estimates of housing units authorized but not started, under construction, and completed. The procedure described above is computed by size of
structure. A total of 8 different sets of authorization ratios that
change from month-to-month are utilized to calculate the number of
housing units started by type of
structure in permit places. The rates are calculated for one-unit
structures
for each of the four regions and for all 2 or more unit structures for
each
of the four regions. Starts by type of structure in nonpermit areas are
calculated
directly in the estimating procedure described above. VI.b.2. Methodology Used for Data Up Through 1998Housing Starts:The compilation of the housing starts series was a multistage process. First, an estimate was made monthly of the number of housing units for which building permits were issued in all permit-issuing places as described above. Second, for each permit selected in the 900 permit-issuing places, an inquiry was made of the owner or the builder to determine in which month and year the unit(s) covered by the permit was (were) started. In case the units authorized by a permit in a particular month were not started by the end of that month, follow-ups were made in successive months to find out when the units were actually started. Ratios were calculated (by type of structure) of the number of units started to the number of units covered by permits based on estimates generated from the 900 SOC permit offices. Separate ratios were calculated for units started from permits of that month and of each preceding month for the past 7 years. These ratios, or starts rates, were then applied to the appropriate estimate of the number of units authorized by permits, based on the Building Permits Survey, in the corresponding months to provide estimates of the number of units started for each month of authorization. Having produced estimates of the number of units started with permit authorization, two additional adjustments were made. An upward adjustment of 3.3 percent was made to the number of one-unit structures (single-family houses) started to account for those units started within permit-issuing areas but without permit authorization. (A study spanning a four year period during the mid 1960s indicated that permits were obtained for all buildings with two housing units or more.) Adjustments were made to account for those units started prior to permit authorization and for late reports. These adjustments were based on historical patterns of pre-permit starts and late data. The estimates for housing units started in permit-issuing places resulted from the procedures outlined above. Third, units identified as started in the monthly canvass of nonpermit areas were weighted appropriately to provide an estimate of total housing starts in areas not covered by building permit systems. Adding this estimate of starts in nonpermit areas to the estimate of starts in permit-issuing places resulted in an estimate of total private housing units started. This same methodology was also used for the estimates of housing units authorized but not started, under construction, and completed. The procedure described above was done by size of structure. A
total of
14 different sets of starts rates that change from month-to-month were
utilized
to calculate the number of housing units started by type of structure
in permit
places. Eight sets of starts rates were used for one-unit structures:
separate
sets of rates for metropolitan and nonmetropolitan areas within each of
the
four regions. For structures with five units or more, separate sets of
starts
rates were used for each of the four regions. Single sets of starts
rates
were used for all regions for structures with two units and for
structures
with three and four units. Starts by type of structure in nonpermit
areas
were calculated directly in the estimating procedure described above. VI.b.3. Adjustments for Non-Reporting of CharacteristicsInformation on selected characteristics, such as purpose of construction or design type, are not reported by every case in our sample. Cases for which characteristics are not reported have been distributed proportionally to those for which the characteristic was reported.VII. RELIABILITY OF DATAVII.a. Housing Units Authorized by Building PermitsThe portion of residential construction measurable from building permits records is inherently limited since such records obviously do not reflect construction activity outside of areas subject to local permits requirements. For the nation as a whole, less than 2 percent of all privately owned housing units are constructed in areas not requiring building permits. However, this proportion varies greatly from State to State and among Metropolitan Areas.The reported statistics are influenced by the following factors: 1. Some new residential construction work in building permit jurisdictions escapes recording. However, we suspect that the number of such unrecorded units is very small. 2. Detailed recent evidence is lacking as to how closely the valuation recorded for building permit purposes approximates the dollar amount of construction work involved. 3. Changes in boundaries of localities due to annexations, new incorporations, etc., result in some problems of comparability over time, even for statistics for the same places. 4. Some building permit jurisdictions close their books a few days before the end of the month, so that the time reference for permits is not in all cases strictly the calendar month. To the extent that most of these limiting factors apply rather
consistently over an extended period, they may not seriously impair the
usefulness of
building permit statistics as prompt indicators of trends in
residential
construction activity. However, the geographic limitations of the data
need
to be kept in mind. In addition, the dollar volume of residential
construction
should be used with caution. Due to the nature of the building
permit
application, we suspect that the valuations may frequently differ from
the
true cost of construction. Any attempt to use these figures for
inter-area
comparisons of construction volume must, at best, be made cautiously
and
with broad reservations. VII.a.1. Sampling and Non-sampling ErrorsThe estimates shown for the United States, Regions, Divisions, and States are based on samples and may differ from statistics which would have been obtained from a complete census using the same schedule and procedures. An estimate based on a sample survey is subject to both sampling error and non-sampling error. The accuracy of a survey result is determined by the joint effect of these errors. Sampling error reflects the fact that only a particular sample was surveyed rather than the entire population. Estimates of the size of the sampling errors are provided by the standard error of the estimates. Non-sampling errors can be attributed to many sources, including: inability to obtain information about all cases in the sample, definitional difficulties, differences in interpretation of questions, inability or unwillingness of respondents to provide correct information, and errors made in processing data. As derived for these statistics, the estimated relative standard errors include part of the effect of non-sampling errors but do not measure any systematic biases in the data.The particular sample selected for the Building Permits Survey is one of a large number of similar probability samples that, by chance, might have been selected using the same sample design. Each of the possible samples would probably yield somewhat different results. The standard error of a survey estimate is a measure of the variation of all possible survey estimates around the theoretical, complete coverage value. The relative standard error is defined as the standard error divided by the value being estimated. Estimates of the relative standard errors have been computed from the sample data for selected statistics in these tables and are available in Table A. Statistics on Counties and Metropolitan Areas are not based on
samples. Although not subject to sampling variability, they are subject
to various non-sampling errors. Explicit measures of their effects
generally are not available, but it is believed that most of the
significant response and
operational errors were detected and corrected in the course of the
Bureau's
review of the data for reasonableness and consistency. VII.b. Housing Units Authorized, but Not Started; Housing Starts; Housing Units Under Construction; and Housing CompletionsThese estimates are based on sample surveys and may differ from statistics which would have been obtained from a complete census using the same schedules and procedures. An estimate based on a sample survey is subject to both sampling error and non-sampling error. The accuracy of a survey result is determined by the joint effects of these errors.VII.b.1. Sampling ErrorsSampling error reflects the fact that only a particular sample was surveyed rather than the entire population. Each sample selected for the Survey of Construction is one of a large number of similar probability samples that, by chance, might have been selected under the same specifications. Estimates derived from the different samples would probably differ from each other. The standard error, or sampling error, of a survey estimate is a measure of the variation among the estimates from all possible samples and, thus, is a measure of the precision with which an estimate from a particular sample approximates the average from all possible samples.Estimates of the standard errors have been computed from the sample data for selected statistics in this report. They are presented in the tables in the form of average relative standard errors. The relative standard error equals the standard error divided by the estimated value to which it refers. The sample estimate and an estimate of its standard error allow us to construct interval estimates with prescribed confidence that the interval includes the average result of all possible samples with the same size and design. For example, suppose the Housing Starts table showed that an estimated 110,000 units in one-unit structures were started in a particular month. Further, suppose that the average relative standard error of this estimate is 3 percent. Multiplying 110,000 by 0.03, we obtain 3,300 as the standard error. This means that we are confident, with 2 chances out of 3 of being correct, that the average estimate from all possible samples of one-unit structures started during the particular month is between 106,700 and 113,300 units. To increase the probability to about 9 chances out of 10 that the interval contains the average value over all possible samples (this is called a 90-percent confidence interval), multiply 3,300 by 1.6, yielding limits of 104,720 and 115,280 (110,000 units plus or minus 5,280 units). The average estimate of one-unit structures started during the specified month may or may not be contained in any one of these computed intervals; but for a particular sample, one can say that the average estimate from all possible samples is included in the constructed interval with a specified confidence of 90 percent. Ranges of 90-percent confidence intervals for estimated
percent changes are shown in the text. When the range of the confidence
interval contains zero, it is unclear whether there was an increase or
decrease; that is,
the change is not statistically significant. VII.b.2. Non-sampling ErrorsAs calculated for these estimates, the relative standard error estimates sampling variation but does not measure all non-sampling error in the data. Non-sampling error consists of both a variance component and a bias component. Bias is the difference, averaged over all possible samples of the same size and design, between the estimate and the true value being estimated. Non-sampling errors are usually attributed to many possible sources: (1) coverage error - failure to accurately represent all population units in the sample, (2) inability to obtain information about all sample cases, (3) response errors, possibly due to definitional difficulties or misreporting, (4) mistakes in recording or coding the data obtained, and (5) other errors of coverage, collection and nonresponse, response, processing, or imputing for missing or inconsistent data. These non- sampling errors also occur in complete censuses. Although no direct measures of these errors have been obtained, precautionary steps have been taken in all phases of the collection, processing, and tabulation of the data to minimize their influence.As described in the section, ``Methodology Used for Data up through 1998,'' a potential source of bias prior to 1999 was the upward adjustment of 3.3 percent made to account for one-unit structures started in permit-issuing areas without permit authorization. Another source is the adjustment for units started prior to
permit authorization and for late reports. The final estimates of
privately owned housing units started are adjusted less than 2 percent
for pre-permit starts and late
reports. VIII. SEASONAL ADJUSTMENTSeasonal adjustment is the process of estimating and removing seasonal effects from a time series to better reveal certain non-seasonal features such as underlying trends and business cycles. Seasonal adjustment procedures estimate effects that occur in the same calendar month with similar magnitude and direction from year-to- year. In series whose seasonal effects come primarily from weather the seasonal factors are estimates of average weather effects for each month. Seasonal adjustment does not account for abnormal weather conditions or for year-to-year changes in weather. Seasonal factors are estimates based on present and past experience. Future data may show a different pattern.The mechanics of seasonal adjustment involve breaking down a time series into 'trend-cycle' and 'seasonal and irregular' components. The trend-cycle is the long-term tendency of a series to grow or decline. Seasonal effects are effects that are reasonably stable in terms of timing, direction and magnitude. Possible causes include natural factors (the weather), administrative measures and social/cultural/religious traditions. The irregular component is anything not included in the trend-cycle or the seasonal effects (including trading-day or holiday effects). Its values are unpredictable with respect to timing, impact, and duration. It can arise from sampling error, non-sampling error, unseasonable weather, natural disasters, strikes, etc. Monthly time series that are totals of daily activities can be influenced by each calendar month's weekday composition. This influence is revealed when monthly values consistently depend on which days of the week occur five times in the month. For example, building permit offices are usually closed on Saturday and Sunday. Thus, the number of building permits issued in a given month is likely to be higher if the month contains a surplus of weekdays and lower if the month contains a surplus of weekend days. Recurring effects associated with individual days of the week are called trading-day effects. Trading-day effects can make it difficult to compare time series values or to compare movements in one series with movements in another. For this reason, when estimates of trading-day effects are statistically significant, we adjust them out of the series. The removal of such estimates is referred to as trading-day adjustment. Most of the seasonally adjusted series are shown as seasonally adjusted annual rates (SAAR). The seasonally adjusted annual rate is the seasonally adjusted monthly value multiplied by 12. The benefit of the annual rate is that not only can we compare one monthly estimate with another, we can also compare monthly data to an annual total. The seasonally adjusted annual rate is neither a forecast nor a projection; rather it is a description of the rate of building permits, housing starts or housing completions in the particular month for which they are calculated. The seasonal adjustment factors shown in this publication were developed using X-12-ARIMA. The X-12-ARIMA is a seasonal adjustment program developed at the U.S. Census Bureau. The program is based on the Bureau's earlier X-11 program and the X-11-ARIMA/88 program developed at Statistics Canada. For more information on X-12-ARIMA please see the Bureau's X-12 website. Different procedures are used to develop seasonal adjustments for monthly New Residential Construction series. The differences are necessary due to publication requirements and the lack of identifiable and stable seasonality in certain series (such as two-to-four unit structures for all series except building permits). The procedures are described below. Housing Units Authorized by Building Permits Seasonally adjusted annual rates are developed each month for building permits by region and type of structure. Each month, 10 series are run through the X-12-ARIMA program. The seasonally adjusted U.S single-family total is the sum of the seasonally adjusted single-family structures in each of the four regions. The seasonally adjusted U.S. total is the sum of the seasonally adjusted U.S. total single-family, U.S. total for two-to-four unit structures, and U.S. total for structures with five units or more. The totals for each of the four regions are seasonally adjusted and modified so that the seasonally adjusted U.S total derived from the region totals equals the seasonally adjusted U.S. total derived from the structures. Housing Units Started and Completed Seasonally adjusted annual rates are developed each month for Starts and Completions by region and type of structure. Each month (separately for Starts and Completions), five series are run through the X-12-ARIMA program. These series are the four regional series for single-family structures and the U.S. total for structures with two units or more. The seasonally adjusted U.S. total is the sum of the five seasonally adjusted components. The seasonally adjusted U.S. total for structures with five units or more is the product of the seasonally adjusted U.S. total for structures with two units or more and the ratio of the unadjusted U.S. total for structures with five units or more to the unadjusted U.S. total for structures with two units or more. Each seasonally adjusted regional total is the sum of the seasonally adjusted single-family regional total and the seasonally adjusted regional total for structures with two units or more (adjusted using the seasonal factor for the U.S. total for structures with two units or more). The seasonally adjusted regional totals add up to the seasonally adjusted U.S. total without any modifications. Housing Units Under Construction The seasonally adjusted numbers of units under construction are developed by region and type of structure. These estimates are computed using a procedure similar to that used for the monthly seasonally adjusted series for Starts and Completions. The X-12-Arima program that we use to derive our seasonal adjustment calculates numerous diagnostic statistics. The table below shows some of these statistics. For a description of the diagnostics published in this table, please click here. Average Percent Changes and Related Measures for Monthly New Residential Construction Click here to view the PDF or here to view the Excel For further information on time series and seasonal adjustment, please refer to the Seasonal Adjustment Frequently Asked Questions.
Source: U.S. Census Bureau
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Page Last Modified: February 12, 2009
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For further information, contact the
Residential Construction Branch at 301-763-5160.