September 04, 2019
CIRB reports dwelling units from permits issued in California, not housing starts. We’re here to shed some light on the difference between permits and starts and why it matters.
Looking for permits issued? You’ve come to the right place.
If housing starts are what you’re after, permits issued are close, but not exactly the same thing. Here’s the difference:
According to NAHB (National Association of Home Builders), a housing start is when “excavation begins for the footings or foundation of a building intended primarily as a housekeeping residential structure and designed for nontransient occupancy,” and a building permit issued authorizes the construction of privately‐owned housing units.
Essentially, a permit could be issued for the construction of a new home, but if the status of the permit is affected; i.e. cancelled, voided, or expires (determined by the building department from which it was applied), then the housing start will not be initiated.
Currently in the U.S., total single- and multifamily housing starts are 2.5% less than permits issued. (Source: US Census Bureau).
And according to NAHB, in 2017, 95% of all permit authorizations for new homes in the U.S. were started within 3 months, most within 1 month or less.
So although the difference between housing starts and building permits may not be substantial, the difference is important for tracking and categorizing housing activity.
Another important distinction to note is the difference between a building permit and a housing unit. Sometimes, CIRB’s residential data is confused with permit totals, but the totals in our reports reflect the units reported in each permit issued.
For instance, a jurisdiction could issue one permit for 4 attached townhomes, and CIRB would track the 4 units in the single-family dwelling category as opposed to the single permit issued.
Similarly, with multifamily, if a permit is issued for a 250-unit apartment building, the 250 units would be counted in the 5+ Units category of our residential reports.
CIRB believes in providing accurate data and being transparent on definitions, classification and research methods.