January 2025 Housing Starts: After Strong Year-End Finish, Single-Family Starts Fall Partly Due To Weather-Related Disruptions

• Building permits issued in January increased to 1,483,000 (SAAR). That’s 0.1%  above the revised December rate but is 1.7% lower than a year ago.
• Housing starts fell to 1,366,000 (SAAR) in January, down 9.8% from the revised December estimate but just 0.7% lower than a year ago, according to the U.S. Census Bureau.
• Single-family housing starts fell to 993,000 (SAAR) in January, falling 8.4% from the December estimate and 1.8% lower than in January 2024.

What happened: Single-family housing starts moved lower in January, mostly due to weather-related disruptions. Starts fell most in the south and the Northeast, regions that were most affected by the severe winter storm and historic snowfall in January.  Multifamily starts also continued to march downward.

Why this matters: Although the year started with higher mortgage rates when compared to the same time a year ago, builders are slowly adapting to the higher-for-longer rate environment. Instead, the unusual weather-related disruptions may have played a key role in explaining the pullback in January.

According to the National Association of Home Builders, the average price reduction in January remained at just 5%, lower than the 6% seen in January 2024. Roughly 61% of builders provided sales incentives of all forms in January, compared to 62% a year ago. Just 30% of builders cut their prices compared to 31% in January 2024. Resilient housing demand means the price per square foot of a new home continues to increase 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 interest rates to remain elevated while also pushing many builders to the sidelines due to higher costs for building materials and components. In January, the National Association of Home Builders estimated that new tariffs on Canada and Mexico could raise construction costs. 

If housing starts continue to decline, new available housing - for-sale or for-rent - could peak this year well short of expectations, setting the stage for a potential rebound in multifamily valuations and stronger home price growth heading into 2026.