New housing starts were down in December following November’s 2.1% increase, according to the monthly New Residential Construction report from the U.S. Census Bureau.
First American Deputy Chief Economist Odeta Kushi said that the November/December Housing Starts – Builders finished 2025 with modest, cautious momentum.
“The November and December housing data show construction ended 2025 on firmer footing,” Kushi said. “Total housing starts rose 3.9% in November and another 6.2% in December to a 1.404 million SAAR — still below year-ago levels but the highest reading since July 2025. Single-family starts increased 4.1% in December to 981,000, the highest level since February 2025 and marking a third consecutive monthly gain, suggesting that late-year improvements in builder expectations were accompanied by modestly stronger groundbreaking activity.”
Permits were a different matter, she said.
Single-Family Permits Slip
“Permits were more mixed. Total permits rose 4.3% in December, driven largely by multifamily authorizations, while single-family permits slipped 1.7% to 881,000. Importantly, single-family permits are no longer consistently declining as they did through the first half of 2025. Instead, they appear to have stabilized in recent months,” Kushi said.
“For the full year, an estimated 1.36 million housing units were started in 2025, down just 0.6% from 2024. That modest decline underscores both the resilience of homebuilding activity amid elevated mortgage rates and the constraints builders continue to face. Total permits fell 3.6% in 2025, signaling continued caution in forward-looking activity,” according to Kushi.
“Significantly, December single-family completions were more than 10% above year-ago levels, adding near-term supply to the market. While starts signal future inventory, completions represent homes that are ready for occupancy, helping to narrow the long-run housing supply deficit. More homes on the market also help ease price pressures,” Kushi noted.
“Builder sentiment improved in November and December as mortgage rates eased and the forward-looking sales index remained above 50. However, the HMI has edged lower to start 2026, and affordability challenges, elevated construction and land costs, and macro uncertainty remain headwinds. In short, construction strengthened into year-end, but the housing market continues to navigate improving — yet still challenging — affordability conditions, while builders face ongoing supply-side pressures,” according to Kushi.
Bright MLS Chief Economist Lisa Sturtevant said homebuyers were holding back during the fourth quarter.
“Despite lower mortgage (rates), homebuyers were holding back during the fourth quarter. Affordability and economic uncertainty remain constraints on home buyers’ willingness to get into the market. More existing inventory has also made new construction less of a draw in some markets.,” Sturtevant noted.
In December, Sturtevant said that new housing starts were slightly higher than a year ago in the Northeast where inventory has been very tight.
Building Permits Were Up
“Overall starts were up 2.7% but new single-family starts increased by an encouraging 12.7% year-over-year. Overall housing starts were also up in the West region, but the increase was driven by starts of housing units in multifamily buildings (i.e. apartments).” Sturtevant said.
“Builders will continue to be cautious to start 2026, waiting for consumers to feel more confident. As buyers show signs of returning to the market, it is likely we will see new construction increase this spring,” Sturtevant said. “Even as demand improves, builders face challenges on the supply side. A lack of construction labor, elevated land costs and often wide-ranging local regulations will continue to make it challenging to build new housing, particularly housing at lower price points.”
According to the Census Bureau, privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,448,000. That is 4.3% above the revised November rate of 1,388,000, but is 2.2% below the December 2024 rate of 1,480,000.
The bureau said that single-family authorizations in December were at a rate of 881,000; this is 1.7% below the revised November figure of 896,000. Authorizations of units in buildings with five units or more were at a rate of 515,000 in December.
An estimated 1,425,200 housing units were authorized by building permits in 2025, the Census Bureau said in its release. That is 3.6% below the 2024 figure of 1,478,000.
Meanwhile, privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,404,000. That’s 6.2% (±10.7%) above the revised November estimate of 1,322,000, but is 7.3% (±14%)* below the December 2024 rate of 1,514,000. Single-family housing starts in December were at a rate of 981,000; or 4.1% (±13.9%) above the revised November figure of 942,000.
Completions Were Up
The December rate for units in buildings with five units or more was 402,000, the Census Bureau said.
An estimated 1,358,700 housing units were started in 2025. This is 0.6% below the 2024 figure of 1,367,100.
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1,525,000, the Census Bureau noted. That is 2.3% above the revised November estimate of 1,490,000, but is 0.1% below the December 2024 rate of 1,527,000.
Single-family housing completions in December were at a rate of 1,023,000; that’s 0.1% below the revised November rate of 1,024,000. The December rate for units in buildings with five units or more was 483,000.
According to the Census Bureau, an estimated 1,497,800 housing units were completed in 2025. That is 7.9% below the 2024 figure of 1,626,900.
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