While 2025 overall was markedly disappointing for homebuilders, large jumps in new construction at the end of the year seem to outline a brighter future for 2026, one that builders are looking to approach with caution.
A delayed New Residential Construction report from the Census Bureau found that housing starts in December came in at a seasonally adjusted rate of 1.4 million, which is 6.2% above the revised November estimate of 1.32 million, but is 7.3% below the December 2024 rate of 1.5 million. Starts were also up from October to November by 3.9%.
Breaking it down, single-family housing starts in December were at a rate of 981,000, 4.1% above the revised November figure of 942,000, but down 9% year-over-year. Multifamily starts were at a rate of 402,000, 10.1% above the revised November figure of 365,000, but down 1% year-over-year.
Looking at 2025 overall, housing starts clocked in at 1.36 million, down slightly by 0.6% from the 1.37 million total in 2024.
“Single-family homebuilding dipped in 2025 because of ongoing affordability challenges, fueled by high housing price-to-income ratios and elevated financing and construction costs,” said Buddy Hughes, the National Association of Home Builders’ (NAHB) immediate past chairman of the board.
Bright MLS Chief Economist Lisa Sturtevant agreed with Hughes’s assessment of affordability challenges, also noting that “more existing inventory has also made new construction less of a draw in some markets.”
Permit-wise, December’s building permits were at a rate of 1.45 million, 4.3% above the revised November rate of 1,388,000, but 2.2% below the December 2024 rate of 1.48 million. Permits were down from October to November by 1.6%. Single-family permits were at a rate of 881,000, 1.7% below the revised November figure of 896,000 and down 10.9% year-over-year. Multifamily permits were at a rate of 515,000 in December, up a whopping 18.1% from the revised November figure of 436,000, and up 18.7% year-over-year.
Total permits for 2025 were at 1.43 million, a 3.6% decline from the 1.48 million total in 2024.
Completed homes came in at a rate of 1.525 million, 2.3% above the revised November estimate of 1,490,000, but 0.1% below the December 2024 rate of 1.527 million. Completions were also up from October to November by 4.2%. Single-family housing completions were at a rate of 1.023 million, 0.1% below the revised November rate of 1.024 million, but up 10.2% year-over-year. Multifamily completions were at a rate of 483,000, up 7.1% from the revised November figure of 451,000, but down 15.9% year-over-year.
2025 saw the completion of an estimated 1.5 million homes, 7.9% below the 2024 figure of 1.63 million.
Of the several rises in multifamily activity, Realtor.com® Senior Economist Joel Berner said that “in the current environment of compressed margins and slow home sales, builders are focusing more on bigger projects with better returns.”
Overall, Berner said that this report’s results point to a “slightly disappointing 2025 for builders, and a cautious start to 2026.”
“Builders are slowing down, but the country still faces a housing shortage that can only be addressed in the long run by building more homes,” he continued. “Without a jolt of confidence for both buyers and builders, progress will not be made toward closing that gap.”
Looking ahead, Sturtevant said that it is “likely we will see new construction increase this spring.” However, she noted that “even as demand improves, builders face challenges on the supply side.”
“A lack of construction labor, elevated land costs and often wide-ranging local regulations will continue to make it challenging to build new housing, particularly housing at lower price points,” she continued.
Hughes also noted that “NAHB expects single-family starts will move slightly higher this year, as mortgage rates are expected to moderate.”
