Winter Weather Weighs on Residential Construction to Start 2025
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Road Ahead Filled with Obstacles
Total housing starts declined sharply in January, with single-family and multifamily starts both falling markedly during the month. A small improvement in permits suggests the drop in ground-breakings largely was owed to adverse weather. However, a broad-based pullback in home builder confidence during February is a reminder of the challenging road ahead for single-family construction. On top of high interest rates and elevated inventory levels, new trade and immigration policies stand to reintroduce supply chain uncertainty and constrain new production.
The changing policy landscape may be a limitation for multifamily construction as well. That noted, multifamily permits look to have stabilized after contracting sharply over the past several years, and it now looks as though apartment and condo construction has found a floor.