Housing Construction Plummets

Housing construction took a major hit in January, with new home starts plummeting nearly 15 percent from the previous month—the biggest decline since the COVID-19 lockdowns. Analysts had expected a more stable performance, but high mortgage rates and economic uncertainty kept builders cautious. Building permits also dropped, signaling that future construction may remain sluggish.

Multi-family housing took the hardest hit, with new apartment construction falling to its lowest level since 2020. Single-family home starts also declined, though at a slower pace. The slowdown was seen across all regions of the country, with the Midwest and Northeast experiencing the steepest drops.

Despite the decline in new construction, the inventory of unsold new homes remains high, suggesting that demand isn’t keeping up with supply. With mortgage rates hovering around seven percent, many buyers are hesitant to jump into the market, forcing builders to scale back. Some experts warn that if new construction continues to slow, affordability could worsen, as fewer homes become available.

While the housing market has been struggling with high interest rates and inflation pressures, this steep drop in new home starts could be a sign that builders are bracing for a prolonged slowdown. Unless borrowing costs ease or demand picks up, construction activity may remain weak in the months ahead.