U.S Homebuilding Hits 10-Month High

Housing Gains Amid Challenges

U.S. single-family homebuilding rose to a 10-month high in December, suggesting some improvement in housing activity toward the end of the year. However, rising mortgage rates and an oversupply of new homes on the market could slow the pace of recovery.

According to a report from the Commerce Department on Friday, permits for future single-family home construction also increased last month, reaching their highest level since February 2024. Many economists averred that, when adjusted for seasonal differences, this increase could be pretty much a blip.

Single-family housing starts, which make up the bulk of homebuilding activity, with an annual rate based on a census, rose by 3.3% in December to its highest level since February 2024 while also being adjusted seasonally, the Census Bureau of the Commerce Department said. Regionally, single-family homebuilding increased by 14.3% in Northeast and 8.3% in the Midwest. It was up 7.1% in the West but held steady in the populous South. Year-on-year, single-family housing starts saw a 2.6% decrease in December.

(Housing Starts and Building Permits Chart, Source: LSEG DataStream)

The optimistic Trump administration policies, projecting major tariffs together with mass deportations of undocumented persons, could yet challenge the ground gained. Economists warned that these may drive commodity prices up further and increase worker shortages, meaning it is very doubtful that gains in the housing and manufacturing sector will be sustained.

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