• Building permits issued in February increased to 1,456,000 (SAAR). That’s 1.2% below the revised January rate and 6.8% lower than a year ago.
• Housing starts increased to 1,501,000 (SAAR) in February, up 11.2% from the revised January estimate but 2.9% lower than a year ago, according to the U.S. Census Bureau.
• Single-family housing starts fell to 1,108,000 (SAAR) in February, rising 11.4% from the January estimate but 2.3% lower than in February 2024.

What happened: Single-family housing starts rebounded in February. Starts increased month over month in every region except the Midwest. Despite the increase, housing starts remained below year-ago levels. 

Why this matters: Housing inventory has been slowly increasing over the past year. Instead of offering larger price cuts, builders have slowed the pace of new construction. Beyond a large number of homes already under construction, key reasons behind the downshift also include escalating policy uncertainty and the implications of tariffs on building materials and components, which are weighing on builder confidence. The building industry — just like the rest of the US economy — remains in “wait-and-see” mode. The rebound in housing permits and starts is a sign that builders remain cautiously optimistic.

According to the National Association of Home Builders, the average price reduction in February remained at just 5%, a slightly smaller discount than the 6% seen in February 2024. Roughly 59% of builders provided sales incentives of all forms in February, compared to 58% a year ago. Just 26% of builders cut their prices compared to 25% in February 2024. Resilient housing demand means the price per square foot of a new home was up 5.4%  year-over-year in January according to Zillow data.

Historically, rising housing inventory has been linked with an increase in the measure of home buyers. However, rising uncertainty over the new administration’s tariffs agenda could cause many builders — not to mention buyers — to remain on the sidelines.