U.S. Housing Starts and Permits (January 2026)

Homebuilding activity improves in January

• Housing starts rose a solid 7.2% month-on-month (m/m) in January to 1.49 million (annualized) units – much stronger than the consensus forecast for a decline to 1.35 million units. 
• The gain was entirely driven by the smaller and more volatile multifamily segment, where starts surged by 30% (or 127k). Homebuilding activity in the single-family segment fell 2.8% (or 27k), nearly erasing a similar-sized gain in the month prior. 
• Activity was mixed among the four Census regions, with housing starts jumping 47.4% in the Northeast and rising a strong 11.4% in the South, but falling 7.5% in the West and 10.8% in the Midwest. 
• Residential permits data suggests the jump in starts will be short lived. Permits fell 5.4% m/m to 1.38 million annualized units in January, wiping out the gain in the month prior. Permitting activity declined in both segments, falling by 0.9% in the single-family segment – marking the second consecutive monthly decline – and a sharp 12.4% in the multifamily segment.

Key Implications

• The positive homebuilding momentum that emerged late in 2025 carried into the start of 2026, though the January report points to a more nuanced backdrop. The headline gain was driven entirely by the multifamily segment, while single-family starts declined. Meanwhile, permitting activity – an important near term leading indicator – pulled back across both segments. Combined with persistent affordability constraints and a recent firming in mortgage rates to around 6.1%, the latest data suggest that momentum in homebuilding activity is likely to ease in the near-term.
• Homebuilder sentiment continues to cool, reinforcing expectations for a challenging near-term environment. The NAHB Housing Market Index has trended lower in recent months, driven largely by weaker buyer traffic. In response, slightly more than one third of builders reported cutting prices in February (by an average of 6%), while sales incentives remain widespread, at roughly two thirds. While improving job growth and a gradual easing in mortgage rates should help support demand later this year, builders are likely to remain reliant on price concessions and sales incentives to move inventory in the near term.  

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