Weather and wary builders kept single-family construction subdued despite headline gains in January
Single-family homebuilding in the United States lost momentum in January as harsh winter weather and cautious builders pulled back, even while volatile multifamily projects drove an apparent jump in overall housing starts.
According to preliminary figures from the Commerce Department, single-family starts fell 2.8% from December to a seasonally adjusted annual rate of 935,000 units in January, and were down 6.5% from a year earlier.
Groundbreaking on new single-family projects tumbled 33.3% in the Northeast and 4.6% in the South, partly reflecting heavy snow and freezing temperatures, while activity in the Midwest and West edged higher.
Single-family sector remained under pressure
Matthew Martin, senior US economist at Oxford Economics, said January’s report showed that “housing starts were surprisingly strong in January, though the details show the strength was concentrated in the volatile multifamily segment.”
He added that “single-family starts declined, with severe winter weather during the month leading to declines in both the Northeast and South,” and that he would “expect a bit of a bounce back next month as the weather turned more amenable in the South.”
Overall housing starts climbed 7.2% in January to a 1.487 million-unit pace, a 9.5% year-on-year gain, as projects with five units or more surged 29.1% to a 524,000 rate.
But permits for future single-family construction slipped 0.9% on the month and 11.6% from a year earlier, pointing to limited near-term relief for supply-constrained buyers.
Martin said Oxford Economics expects “a gradual improvement in housing starts over the course of 2026,” but cautioned that “builders will need to work down their inventory of completed homes for sale before single-family starts rise on a sustained basis.”
Builders juggled rates, costs and soft sentiment
Residential investment already contracted for four consecutive quarters, with tariffs on imported construction inputs, lingering labor shortages and higher mortgage rates weighing on margins and buyer demand.
Builder confidence, as tracked by the NAHB/Wells Fargo Housing Market Index, slumped into the low 30s in mid‑2025, signaling a contraction in single-family construction even before the latest weather shock.
Last month, the closely watched gauge slipped to 36, down from 37 in January and its weakest reading since September, extending a run of nearly two years below the 50 neutral mark.
While mortgage rates eased from their 2023 peaks, Oxford Economics previously warned that affordability remained stretched and that “housing starts are likely to remain sluggish for the rest of the year” as buyers contended with elevated prices and uncertain income prospects.
Pipeline stayed active but uneven
Building permits for projects with five units or more dropped 13.4% in January, while overall permits fell 5.4% on the month and 5.8% from a year earlier, suggesting that multifamily strength could prove fleeting.
Single-family completions slipped 1% in January to a 970,000-unit annual pace, leaving builders with a stock of finished homes to move before they committed to significantly more starts.
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