Housing starts rise to five-month high in broad increase

New residential construction in the US rose to a five-month high in December, as homebuilders boosted production to take advantage of lower borrowing costs.

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Housing starts increased 6.2% to an annual pace of 1.4 million homes in December, according to figures released Wednesday by the government, which were delayed by fall’s federal shutdown. That beat all estimates in a Bloomberg survey.

The advance was broad-based, with both single-family home starts and apartment projects rising at year’s end. The number of one-family homes started was the highest since February. 

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The stronger construction numbers suggest that builders were growing more confident at year’s end even as they continued to sell off a bloated inventory of new houses. For the full year, however, starts notched a fourth-straight annual decline.

Economists at Pantheon Macroeconomics and Santander Capital Markets suggested in notes Wednesday that the late 2025 gains may not last, chalking them up partly to relatively mild weather. 

Ben Ayers, senior economist at Nationwide, suggested rougher weather at the start of 2026 would hurt upcoming housing results before construction ramps up later this year.

“Despite the rise in starts and permits, survey readings from home builders have been relatively sanguine in early 2026,” Ayers said in a note. “This suggests that the rise in starts could fade over the first quarter, especially given the likely weather impacts.”

In December, building permits, which point to future construction, rose 4.3% to an annualized pace of 1.45 million, the highest since March, government data show. Single-family permits fell slightly.

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Around the nation, housing starts were driven by the West, which rose by 37.4%, the biggest gain in nearly a year. In the South, the US’s biggest homebuilding region, construction fell 2.8% to an annual pace of 741,000. 

On Wednesday, the government also released delayed housing data for November. The data show the recovery started that month after a weak October.

The new residential construction data are volatile, and the report showed 90% confidence that the monthly change ranged from a 4.5% drop to a 16.9% gain.

A separate report Wednesday showed US industrial production rose in January by the most in nearly a year, fueled by a broad increase in manufacturing and another healthy advance in utility output.

Meanwhile orders for business equipment increased in December by more than projected, suggesting solid capital investment at the end of last year as trade policy uncertainty gradually diminished.