Single-family
housing
starts
ticked
up
in
December,
but
were
down
about
7.0%
year-over-year
in
2025.

According
to
the

National
Association
of
Home
Builders
(NAHB),
new
residential
construction
is
expected
to
stay
relatively
flat
this
year,
but
could
rebound
in
2027
if
mortgage
rates
inch
lower
and
pent-up
demand
enters
the
housing
market. 

Census
data

released
on
Wednesday
revealed
that
single-family
housing
starts
fell
about
7.3%
last
year,
but
there
were
wide
regional
variations.
Single-family
starts
fell
8.4%
in
the
South,
and
10.7%
in
the
West.
Housing
starts
in
the
Northeast
and
Midwest,
regions
with
less
population
growth,
were
relatively
unchanged. 

Nationally,
new
single-family
permit
authorizations
fell
about
10.9%,
correction
territory.
The
South,
which
accounted
for
60%
of
all
new
authorized
permits
issued,
experienced
a
15.4%
yearly
decline,
while
permits
authorized
in
the
South
declined
by
6.6%.
The
Midwest
saw
a
smaller
3.2%
decline,
and
authorized
permits
in
the
Northeast
were
unchanged.

After
ramping
up
speculative
construction
overaggressively
during
better-than-expected
post-COVID
years
through
2024,
homebuilders
in
Sun
Belt
–
namely,
Florida
and
Texas
–
stuck
with
an
oversupply
of
standing
inventory.
The
2025
pullback
in
new
construction
is
a
correction
to
this
supply
imbalance. 

Those
market
dynamics
aren’t
occurring
in
Northeastern
and
Midwestern
states
that
didn’t
experience
the
same
population
shifts
during
and
after
the
pandemic.             

“These
are
the
states
that
really
didn’t
see
the
pandemic
shift.
So
these
are
the
states
that
were
able
to
withstand
the
volatility
much
better,”
Danushka
Nanayakkara,
AVP,
Forecasting
and
Analysis
at
NAHB,
said
during
a
session
this
week
at
the
International
Builders’
Show
(IBS).

Multifamily
starts
in
buildings
with
five
units
or
more
were
up
about
18%
in
2025,
although
Robert
Dietz,
Chief
Economist
at
NAHB,
said
that
some
in
the
industry
question
those
numbers.
The
government
shutdown
last
fall
could
have
something
to
do
with
that. 

“There’s
a
lot
of
private
data
providers
who
would
say
multifamily
construction
starts
were
down
in
2025
and
the
census
data
is
wrong,”
Dietz
said.
“I
suspect
when
we
get
revisions
in
the
Census
data,
it’s
not
going
to
be
an
18%
gain,
but
nonetheless,
it
would
show
an
up
year.” 

NAHB
forecasts
that
housing
starts
–
single-
and
multifamily
–
will
eke
out
a
1%
gain
in
2026.
Nanayakkara
pointed
to
some
structural
changes
in
homebuilding
that
will
continue
to
impact
the
industry
in
the
near-term. 

“We
have
about
a
300,000-person
shortage
of
skilled
labor,
as
well
as
lot
issues,
financing
issues,
and
regulatory
issues,
which
add
about
$94,000
per
single-family
home
in
pure
regulation,”
she
said. 

NAHB
forecasts
that
single-family
housing
starts
will
increase
5.0%
in
2027,
as
an
expected
decline
in
mortgage
rates
will
likely
release
some
pent-up
demand
into
the
housing
market.
Many
buyers,
economists
and
industry
insiders
say,
are
waiting
for
lower
mortgage
rates
until
they
buy
a
new
home. 

The
Federal
Reserve
is
expected
to
cut
rates
twice
this
year,
but
Dietz
doesn’t
expect
a
sustained
period
of
time
with
rates
below
6.0%
until
2027. 

The
NAHB/Wells
Fargo
Housing
Market
Index
(HMI)’s
builder
confidence
gauge
is

still
negative
this
month,
with
a
reading
of
36,
down
six
points
year-over-year. 

However,
homebuilders
at
the
International
Builders’
Show
are
expressing
a
note
of
cautious
optimism.
Many
builders
report
an
encouraging
uptick
in
traffic
and
demand
since
Mid-December,
although
it’s
still
too
early
to
tell
if
that
will
carry
over
into
a
strong
spring
selling
season. 

The
monthly

BTIG/HomeSphere
homebuilder
survey
of
small
and
mid-sized
homebuilders
released
on
Wednesday
found
that
builders
reported
stronger
demand
in
January
when
compared
with
December. 

According
to
the
survey,
38%
of
builders
in
January
reported
higher
year-over-year
traffic,
compared
to
26%
last
month.
Only
19%
experienced
a
decrease
in
traffic
in
January,
compared
to
39%
in
December.