U.S. Housing Starts and Permits (December 2024)

Homebuilding activity rebounded solidly in December

• Housing starts increased 15.8% month-on-month (m/m) in December to 1.50 million (annualized) units, surpassing expectations for a modest uptick. Revisions to the data for the two prior months added 37k units to the previous reported tallies.
• For the full year, housing starts were down 4.0% relative to 2023, as a 25.0% decline in multi-family starts offset a 6.5% gain in single-family starts.
• December's increase in housing starts was driven by the multi-family segment which rebounded by 61.5% m/m (or 171k units), while single-family starts rose 3.4% m/m (or 34k units).
• Residential permits fell 0.7% m/m to 1.48 million annualized units. Single-family permits rose 1.6% m/m, while multi-family permits fell 5.0% m/m.
• Among the four Census regions, gains were recorded in the Northeast (+40.2% m/m), Midwest (+20.0% m/m), and South (+17.7% m/m). The West was the only region to see a decline (-0.7% m/m).

Key Implications

• Homebuilding activity ended 2024 on a high note, breaking a three-month streak of declining housing starts. The monthly uptick was largely concentrated in the multi-family segment, which hit its highest level since last December, while the larger single-family segment hit a ten-month high after rising in four of the past five months. Permitting activity points to continued growth for single-family starts over the coming months, while multi-family starts are likely to see some moderation after last month's outsized gain.
• Coming into the new year, homebuilder confidence remained restrained in January according to the National Association of Home Builders' confidence index. Although homebuilder confidence has improved over the past three months on expectations for a more accommodative regulatory environment under the incoming administration, most of the post-election boost has been reversed. Homebuilding activity is expected to trend higher in 2025, but elevated uncertainty related to fiscal policy and its impact on the decisions of the Federal Reserve will likely keep activity subdued over the near-term.  

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