Home builders continue to face headwinds including higher rates, higher financing costs, and a lack of buildable lots, despite optimism that the Trump administration, which took office on January 20, will ease construction costs in coming months.
The National Association of Home Builders (NAHB) reported this week that single-family construction improved in December, with overall housing starts increasing 15.8% to a seasonally adjusted annual rate of 1.50 million units last month.
Home builders closed out December 2024 with the highest rate of housing starts since February 2024. Among the overall housing starts, single-family starts increased 3.3% to 1.05 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 61.5% to a 449,000 unit pace.
However, the total number of housing starts for 2024 was 1.36 million, marking a 3.9% decline from the 1.42 million total from 2023. Single-family starts in 2024 totaled 1.01 million, up 6.5% from the previous year, while multifamily starts fell 25% from 2023.
Chairman of NAHB, Carl Harris, a custom-home builder from Wichita, Kansas, stated that the 6.5% increase in single-family housing starts is a small win towards alleviating affordability challenges in 2025.
“The industry expects to see a slight gain for single-family home building in 2025 because of a persistent housing shortage and ongoing solid economic conditions,” Harris stated per NAHB’s press release.
“While December was a solid month for apartment starts, the sector ended 2024 down 25% in terms of total starts,” said NAHB Chief Economist Robert Dietz. “In December, and on a three-month moving average basis, there were 1.7 apartments completing construction for every one apartment starting construction. Multifamily construction will stabilize later in 2025 as more deals pencil out, with the industry supported by a low national unemployment rate.”
Regional housing starts data for 2024 shows combined single-family and multifamily starts were 9.1% higher in the Northeast, 0.1% lower in the Midwest, 5.2% lower in the South, and 7.7% lower in the West.
Total permits for 2024 were 1.47 million, a 2.6% decline from the 1.51 million total from 2023. Single-family permits in 2024 totaled 981,000, up 6.6% from the previous year, a positive sign for 2025.
Overall permits fell 0.7% to a 1.48-million-unit annualized rate in December 2024 and were down 3.1% compared to December 2023. Single-family permits increased 1.6% monthly to a 992,000-unit rate, but were down 2.5% in December compared to the previous year. Multifamily permits decreased 5% to a 491,000 pace.
Regionally, permits were 1.5% higher in the Northeast, 3.5% higher in the Midwest, 3.1% lower in the South and 6.6% lower in the West.
The number of single-family homes under construction was down 5.3% from a year ago, at 641,000 homes. The number of apartments under construction was down 21% from a year ago, at 790,000. The count of apartments under construction peaked in July 2023 at 1.02 million and has been trending lower ever since.
