(February 20, 2025) The National Association of Home Builders is reporting constrained housing affordability conditions due to ongoing elevated interest rates, which reduced single-family production to start the new year.
Overall housing starts decreased 9.8% in January to a seasonally adjusted annual rate of 1.37 million units, according to a U.S. Department of Housing and Urban Development report and the U.S. Census Bureau. The January reading of 1.37 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months.
Within this number, single-family starts decreased 8.4% to a 993,000 seasonally adjusted annual rate; the January pace was 1.8% lower than a year ago. The multifamily sector, which includes apartment buildings and condos, decreased 13.5% to an annualized 373,000 pace.
As mirrored in the NAHB/Wells Fargo HMI, high construction costs, elevated mortgage rates, and challenging housing affordability conditions are causing builders to approach the market cautiously. There are competing upside and downside risks, including discussed tariffs and regulatory reform. Given persistent affordability concerns, reducing inefficient regulatory costs would offer the best policy to improve the attainable housing supply and reduce shelter inflation.
On a regional basis compared to the previous month, combined single-family and multifamily starts are 27.6% lower in the Northeast, 10.4% lower in the Midwest, 23.3% lower in the South, and 42.3% higher in the West.
Overall, permits increased 0.1% to a 1.48 million unit annualized rate in January. Single-family permits were at a 996,000 annualized rate, remaining unchanged compared to the previous month. Multifamily permits increased by 0.2% to an annualized 487,000 pace.
Looking at regional permit data compared to the previous month, permits are 6.1% lower in the Northeast, 1.8% higher in the Midwest, 0.1% lower in the South and 2.3% higher in the West.
The number of single-family homes under construction in January was 641,000, down 6.3% from a year ago. The number of multifamily units under construction was 768,000, down 22.1% from a year ago.
There were 669,000 multifamily completions in January, up 11% from January 2024. For each apartment starting construction, 1.8 apartments are completing the construction process.
