Overall housing starts notched a strong monthly gain in January, though single-family starts slowed by 2.8% to land 6.5% lower than single-family starts a year ago.
Contraction in single-family activity in the first month of the year was offset by roughly 29% monthly and 57% yearly growth in new multifamily housing starts, which were 7.2% above December levels and 9.5% higher over the year.
Single-family completions, meanwhile, dropped 1% from December and 3.3% from a year ago, reflecting how many fewer finished new homes reached the market. Overall completions were 4.8% higher than December but 7.5% lower than a year ago, as severe winter weather that affected most of the U.S. in January likely curtailed some activity.
The U.S. Census Bureau’s release of updated new residential construction figures on Thursday follows recently released year-end reporting showing that new single-family construction activity slowed measurably in 2025.
In 2026, high financing costs, uncertainty tied to President Donald Trump’s signature tariff policies and slow purchase demand amid poor affordability continue to trap U.S. home builders behind the eight ball.
A spike in energy costs brought on by the war with Iran that the U.S. and Israel started on Feb. 28 will further raise costs across the home building supply chain, rubbing additional uncertainty and cost against builders’ already fraying margins.
In a research note that the National Association of Home Builders (NAHB) published on March 4, just five days into the war, Chief Economist Robert Dietz said affordability pressures have dampened builders’ outlooks for the year, as “downpayments remain the key binding constraint on demand” from homebuyers.
“An increase of just $1,000 in the cost of a home would price out 156,000 households from the market at today’s prices and interest rates,” Dietz said, underscoring pricing uncertainty that prolonged disruptions from the ongoing military conflict with Iran introduces. “More than half of Americans cannot afford a $300,000 home.”
But payment pressures have begun to pile on for prospective homebuyers ahead of typically busier spring and summer months for home sales. As the Iran war raises energy costs and trade risks, fueling fears of higher inflation, mortgage rates have jumped back up to almost 6.2% in the past week.
Still, the president and CEO of the Mortgage Bankers Association, Bob Broeksmit, expressed optimism Thursday amid rising geopolitical volatility and subsequent mortgage rate action. The MBA reported this week that mortgage application volumes have risen for three consecutive weeks since mid-February, with purchase demand finally registering gains.
“Despite ongoing geopolitical tensions and broader economic uncertainty, overall demand remains strong,” said Broeksmit in commentary shared with Scotsman Guide. “Applications to both refinance and buy a home are running far above year-ago levels.”
Census data shows single-family permits declined 0.9% over the month in January and 11.6% over the year, amid an overall residential permitting decline of 5.4% from December and 5.8% from a year ago. Because permits offer a forward-looking signal on housing starts, the decline suggests builder activity may stay subdued in the months ahead.
Sour market sentiment reported by builders supports that subdued outlook, with six-month sales expectations contracting in January and February to kick off the year, according to a popular builder survey conducted by the NAHB and Wells Fargo.
Sam Williamson, senior economist at title insurance giant First American Financial Corp., shared in an email to Scotsman Guide that declining sentiment shows “builders remain hesitant to accelerate production amid challenging affordability conditions.”
“Single-family starts have trailed completions since July 2025,” noted Williamson, meaning the pipeline of homes under construction has been shrinking since last summer when builders pivoted to managing bloated inventory. “Expect units under construction to keep trending lower as builders work through their backlog, rather than expand it.”
