US Housing Starts Fell 7% in 2025, Modest Rebound Forecast
Housing starts in the U.S. fell by 7% throughout 2025, reflecting broader market softness. The National Association of Home Builders forecasts a potential 1% recovery in 2026, contingent on mortgage rates remaining below 6%. A more significant 5% rebound is projected for 2027 if favorable rate conditions hold.
- The 2025 decline in single-family starts was not uniform across the country; starts fell 8.4% in the South and 10.7% in the West, while the Northeast and Midwest remained relatively stable. - While single-family starts decreased by about 6.9% for the year, the multifamily sector (buildings with 5+ units) saw starts increase by 17.4% compared to 2024. - Persistent affordability issues and economic uncertainty have pushed builder confidence to low levels; the NAHB/Wells Fargo Housing Market Index remained in negative territory (below 50) for 22 consecutive months as of February 2026. - According to the NAHB's Chief Economist, Robert Dietz, prices for existing homes will likely need to fall in 2026 to compete with new construction, where builders have been offering price cuts since 2022 to improve affordability. - The total number of housing units started in 2025 was approximately 1.36 million, marking a slight 0.6% decrease from the 1.37 million started in 2024. - Structural challenges continue to impact the industry, including a shortage of around 300,000 skilled construction workers and regulatory costs that add an average of $94,000 to the price of a new single-family home. - The pipeline for future housing shows signs of slowing, as the number of single-family homes under construction in December 2025 fell to its lowest point since November 2020.
