U.S. Housing Starts and Permits (January 2025)

Homebuilding activity fell to start 2025

• Housing starts fell 9.8% month-on-month (m/m) in January to 1.37 million (annualized) units, below expectations for a smaller decline. Revisions to the data for the two prior months added 27k units to the previous reported tallies.
• January's monthly decrease in housing starts was shared between the single-family and multi-family segments, with the former falling 8.4% m/m (or 91k units) and the latter falling 13.5% m/m (or 58k units).
• Residential permits were roughly unchanged at 1.48 million annualized units. This applied to both single-family and multi-family permits.
• Among the four Census regions, gains were only recorded in the West (+42.4% m/m). Declines were recorded in the Northeast (-27.6% m/m), South (-23.3% m/m), and Midwest (-10.4% m/m).

Key Implications

• Homebuilding activity retreated to start 2025, partly owing to volatility in the multi-family segment but also likely in part owing to severe weather during the month. Taking a step back, the annual percentage change in single-family starts was down 1.8%, while multi-family starts were up 2.2%. This indicates that the homebuilding market remains cautious, but stable overall.
• However, we have seen homebuilder confidence stumble in the new year owing to elevated uncertainty that is clouding the outlook for the industry. Homebuilder expectations for home sales six months from now fell to the lowest level in over a year in February, taking them 30% lower than they were at the end of 2024. On the trade front, NAHB's Chief Economist noted that roughly a third of appliances and softwood lumber are sourced through international trade, illustrating the vulnerability of the sector to potential tariffs. Homebuilding activity is likely to remain subdued over the near-term as still elevated interest rates and policy uncertainty weigh on the industry.  

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