• Building permits issued in December increased to 1,448,000 (SAAR). That’s 4.3% above the revised November rate but is 2.2% lower than in December 2024. Single-family permits were at a rate of 881,000 in December. This is 10.9% lower than a year ago.
• Housing starts increased to 1,404,000 (SAAR) in December, up 6.2% from the revised November estimate but still 7.3% lower than a year ago, according to the U.S. Census Bureau.
• Single-family housing starts increased to 981,000 (SAAR) in December, roughly 4.1% higher than the November estimate but still 9% lower than a year ago.

Economist quote: 

“The uptick in new construction at the end of 2025 offered a modest boost of optimism. Still, challenges remain for the sector. Sluggish home sales at the start of 2026 could cause builders to hesitate. Zillow forecasts home values will likely move sideways in 2026.”

What happened: Housing permits and starts increased in December. However, despite the year-end uptick in activity, new construction finished 2025 down compared to the previous year. 

The largest decline came from single-family construction, which had 6.9% fewer homes started in 2025. Despite weaker-than-usual rent growth, multifamily construction showed new signs of life, recording an 18% increase in units started in 2025 in buildings with 5 or more units.

Housing starts fell most in the South, the region where housing inventory increased most and where price growth has shown the largest moderation.

Why this matters: Despite a significant improvement in housing affordability this year, home sales continued to bounce along the bottom. With homes taking longer to sell, many builders pumped the brakes on new projects. 

The year-end uptick in activity points to cautious optimism. Although US census estimates are often revised, the modest uptick in construction at the end of the year is good news for housing affordability — especially for renters. The increase in the number of multifamily construction projects will lead to even more apartment units coming on the market. New supply should keep the number of vacancies high and put further downward pressure on multifamily rents. Zillow now forecasts multifamily rents to remain essentially flat (0.6%) in 2026.