Housing starts saw quite an unexpected jump this January—however, overall construction data paints an unsure picture for the coming months, according to the latest data from the Department of Housing and Urban Development and the Census Bureau.
The New Residential Construction report for January found that housing starts were estimated at a rate of 1.49 million, up a sharp 7.2% from December’s revised rate of 1.39 million (originally 1.4 million). Starts were also up 9.5% year-over-year.
Realtor.com® Senior Economist Joel Berner characterized this month’s data as a “mixed bag,” though, as housing starts have seen improvement, but building permits and housing completions have not followed suit.
Berner also explained that January’s improvement in housing starts was largely due to continued growth in the multifamily sector.
While single-family starts fell 2.8% month-over-month and 6.5% year-over-year to a rate of 935,000, multifamily starts were up a whopping 29.1% month-over-month and 56.9% year-over-year to a rate of 524,000.
“The multifamily starts figure is unseasonably high for January, actually exceeding the marks from June and August of 2025 in unadjusted terms,” said Berner. “Though asking rents have been falling for over two years, there is reason to believe that they are finding their trough and builders appear to be prioritizing large-scale multifamily projects in anticipation of rents rising.”
He added that with rising costs in the construction industry, it is “unsurprising to see builders pivoting toward projects with higher margins.”
Starts were also mixed regionally, coming in 47.4% higher in the Northeast, 10.8% lower in the Midwest, 11.4% higher in the South and 7.5% lower in the West.
Building permits, as mentioned, were lacking in January, falling 5.4% month-over-month and 5.8% year-over-year to a rate of 1.38 million. Single-family permits were down 0.9% month-over-month and 11.6% year-over-year to a rate of 873,000. While multifamily permits also fell month-over-month by 13.4% to a rate of 453,000, they did see a year-over-year improvement of 8.9%.
Regionally, permits were 9.6% lower month-over-month in the Northeast, 9% higher in the Midwest, 3.5% lower in the South and 15.7% in the West.
Berner noted that this month’s permitting data “paints a pessimistic picture of new construction to come.”
Housing completions data in January was not as dim as building permits, but also did not paint as bright a picture as housing starts. Completions were up 4.8% month-over-month to a rate of 1.53 million, but were down 7.5% year-over-year. Single-family completions were down 1% month-over-month and 3.3% year-over-year to a rate of 970,000. Multifamily completions did see a month-over-month improvement of 16.2% to a rate of 532,000, but were down 15.6% year-over-year.
Regionally, completions were down 10.3% in the Northeast, up 5.9% in the Midwest, up 6.0% in the South and up 10.3% in the West.
Overall, National Association of Home Builders’ (NAHB) Chairman Bill Owens noted that this month’s report highlights a definite slowdown in the single-family market as “builders continue to deal with elevated construction costs while affordability conditions are a cause of concern for many potential homebuyers.”
On the brighter side, Berner said that this data also “shows us that builders are responding to the market, which is currently quite tough for those selling homes.”
“They are focusing on the areas that need supply, like the Northeast and Midwest, and pulling back in segments that do not, especially single-family homes in the South and West,” he continued. “We know that builders have been aggressively trying to move inventory, resorting to below-market rates and price cuts at a higher rate than existing home sellers, so their reluctance to continue adding homes that they struggle to sell is understandable.”
Berner also noted that on a larger scale the U.S. is still facing a significant supply gap of 4 million homes, which “will not be closed if building activity continues to slow.”
“For the buyers of the future to avoid the inventory constraints of the present, we simply need more homes to be built,” he concluded.
