• Building permits issued in December increased to 1,483,000 (SAAR). That’s 0.7%  below the revised November rate and still 3.1% lower than a year ago.
• Housing starts increased  to 1,499,000 (SAAR) in December, up 15.8% from the revised November estimate but 4.4% lower than a year ago, according to the U.S. Census Bureau. An estimated 1,364,100 housing units were started in 2024. This represents 3.9% fewer starts than in 2023.
• Single-family housing starts increased to 1,050,000 (SAAR) in December, up 3.3% from the November estimate and 2.6% lower than in December 2023. An estimated 1,009,400 single-family homes were started in 2024. This was the highest level of single-family housing starts since 2021.

What happened: Single-family housing starts rebounded in December ending the year with more new construction than in 2023. Despite rising housing inventory coupled with higher uncertainty about the future path of mortgage rates, builders remained cautiously optimistic and ended the year on a strong note. Although multifamily starts rebounded in December, they ended the year lower than in 2023. The decline in multifamily starts this year was somewhat expected given the large backlog of residential buildings already under construction and easing rent growth. 

Why this matters: The recent inflation uptick and the prospect of stronger economic growth, as well as rising uncertainty over an incoming administration, pushed mortgage rates higher in December. However, the impact of mortgage rates was somewhat subdued since December tends to be a low point for housing activity.

Although more homes were started, fewer new homes were added to the for-sale market in December. Single-family housing completions fell 7.4% in December. Along with easing demand in December, lower supply means price growth likely did not ease much from the November pace. In November, the median sale price per square foot of newly built homes on Zillow was 5.2% higher than in November 2023.

According to the National Association of Home Builders, the average price reduction in December remained at just 5%, lower than the 6% in December 2023. Roughly 60% of builders provided sales incentives of all forms in December, unchanged from a year ago. Just 31% of builders cut their prices compared to 36% in December 2023.