Homebuilders had another miserable month but permits jumped 15.8 percent.
The Monthly New Residential Construction report for March 2025 ended the quarter on a weak note for starts.
Building Permits
- Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,482,000. This is 1.6 percent above the revised February rate of 1,459,000, but is 0.2 percent below the March 2024 rate of 1,485,000.
- Single-family authorizations in March were at a rate of 978,000; this is 2.0 percent below the revised February figure of 998,000.
- Authorizations of units in buildings with five units or more were at a rate of 445,000 in March.
Housing Starts
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,324,000. This is 11.4 percent (±13.5 percent) below the revised February estimate of 1,494,000, but is 1.9 percent (±10.6 percent) above the March 2024 rate of 1,299,000.
Single-family housing starts in March were at a rate of 940,000; this is 14.2 percent (±14.2 percent) below the revised February figure of 1,096,000.
The March rate for units in buildings with five units or more was 371,000.
Housing Completions
Privately-owned housing completions in March were at a seasonally adjusted annual rate of 1,549,000. This is 2.1 percent (±11.5 percent) below the revised February estimate of 1,582,000, but is 3.9 percent (±10.7 percent) above the March 2024 rate of 1,491,000.
Single-family housing completions in March were at a rate of 1,029,000; this is 0.9 percent (±10.9 percent)*above the revised February rate of 1,020,000.
The March rate for units in buildings with five units or more was 503,000
Note the huge margins of error in these numbers, up to 13 percentage points in starts and 10 percentage points in completions.
Housing Starts 1959-Present
The boom-bust nature of housing is on fill display in the above chart.
Housing Starts Single Family vs Multi-Family
Understanding Current Forces
- Boomers drove a huge need for housing. But the supply of housing from retiring and dying boomers will accelerate.
- Millennials and Zoomers are having fewer kids. Affordability is a huge issue.
- Immigration drove a huge need for multi-family but Trump put a screeching halt to immigration needs.
- Mortgage rates are still near 7.0 percent and tariff uncertainty adds to job loss fears.
In addition to demographics, the Fed is a big driver of prices and demand.
Related Posts
March 20, 2025: Existing-Home Sales Rebound 4.2 Percent from -4.7 Percent in February
Meandering weakness continues. Sales have gone nowhere for two years.
March 15, 2025: The Case-Shiller Home Price Index Hits Another New Record High, Thank the Fed
I have not commented on Case-Shiller for a while. Here is a batch of new charts.
Prices are high but few are buying.
On February 3, 2025: Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Is the Fed playing politics? Does the Fed know what it’s doing at all?
A sample of one:
I was deep into negotiations to add a small farm to my large farm. It had an older home and outbuildings. As soon as trump announced his tariffs I halted negotiations. The sellers have come back with a large price concession. I’m not reaching out to catch the knife. There will be no corn or soybeans planted on my farm this year. I have chosen to rotate into soil builders and wait the coming crash out.
In an industrial park I have investments in, we stopped building new units as rentals came to a screeching halt.
The only other property owner within the park manufactures high quality aircraft parts and has dropped a shift.
Like Mish stated, the upper midwest will be hit hard…
It may not be making the news yet, but people are going to be losing their jobs!
Trump has alienated our friends and empowered ur enemies…
The bigger picture is Housing starts are still lower than the peak 3 years ago. Tariffs did not cause the COVID housing market to end, and the Bidenomics housing market to begin.
Tampa sees major drop in new residents due to costs, natural disasters: reporthttps://www.wfla.com/news/hillsborough-county/tampa-sees-major-drop-in-new-residents-due-to-costs-natural-disasters-report/
So house prices should be going down.
Yet – prices seem to be increasing or holding steady. Could it be the need (demand) to somewhere house millions of illegal aliens over the last 4 years? Those folks don’t move in with the Democratic Congressfolks. Thank you to former “sharp as a tack” pres. Joey B.
Trump increased tariffs on Canadian lumber imports from 14.5% to 34.5% two weeks ago.
Tariffs on Tile and marble flooring come from Spain, Mexico, and Italy.
Tariffs on Drywall from Mexico and Canada.
Tariffs on Appliances from China, and Korea.
Tariffs on steel and aluminum.
Next may be tariffs on copper used for wiring.
The costs for US homebuilders (and other businesses) keeps going up thanks to tariffs.
Demand for new housing plunged. Price of lumber, tiles, appliance and drywall will fall. Tariffs don’t matter.
Yep. But homebuilders are still building “some houses”. And the costs of their inputs are still going up.
For example, as of April 11, lumber prices are up 19.4% over the last year.
And demand is dropping because of higher prices and greater uncertainty.
shorting TOL………seems a good bet still. in my long life as a r/e investor having lived through a few cycles since the 70s and 86 tax act……..this smells like a total guarantee debacle coming up for the next few years. i hope i’m correct. i like buying when cap rates are 15% and selling at 3 or 5%. just bought a small place built in 1858 at a deep discount to asking price in the autumn.
Agreed, I have stopped construction on all of my projects and cancelled the purchase of additional farm property. Several contractors that previously had their bookings full for two or more years have approached me (one yesterday) for work.
Just like when covid hit, trump has no clue what to do but blame others or call it a conspiracy. Instead of working with our corporate leaders and allies he has upended the planning process and business cycle. This is already causing job losses and falling tax revenues.
He reminds me of that second grade bully that was held back a year and is physically bigger than those around him. The bullying only lasts so long until somebody’s big brother comes along, kicks him in the nuts and rubs dog poo in his face. Then he is left without friends and cowering as he comes home from school just waiting for another person he messed with’s big brother or sister to kick him in the nuts.
China is clearly kicking trump in the nuts. Russia and Iran are rubbing dog poo in his face by pumping oil again and ignoring the sanctions.
Trump, without our former allies in Europe is being left to twist in the wind.
Look out below!
I totally agree! Something is “Only Worth” what someone else is Willing & Able to Pay For.
The simplest example is Perishable’s as they drop in value as they ripen. There is still a need for it, but at a far less cost, and in many cases it’s given away.
A house not lived in and cared for as such, is a perishable item imo. Some refer to them as “Tear-downs” or not worth saving. At that point it becomes a cost to the owner.
New or not it’s got to go. Some auction them off, many drop their prices asap, in a bid to get it sold, etc. All example’s equaling less than desired for the Owner/Builder.
Homebuilders did have yet another miserable month, and expect many more months of such. I touched on this awhile back, and it was somewhat obvious then, but obvious to everyone now.
Pulling Permits means absolutely nothing at all, in regards to this topic. It is often used as a sway or emotional driver, to get people to actively move on buying, and not just talking about it. When they hear things like this, to many it means time to buy. In reality, when you can comfortably, financially, place yourself into a home, and know you won’t lose it, if you lost your job let’s say. That’s the time you know it’s right to buy and be able to keep your eventual Home IMO.
In fact it’s more a legal obligation to start the dream for a builder to possibly take on a new development. It doesn’t mean they can or will be able to, but more a formality to see if the dream is supported (survey maps, boundary lines, historical data if any etc.) by the reality.
Now the fun begins to see if the law agrees with what they have dreamed up.
The building department/inspector will have to approve this permit, meaning tell you it is ok to do this work. This can take a long time or short, but you won’t know until they dig up all of these documents, and align them with what’s proposed.
“Housing Starts” is the tell tale sign that work has been approved to begin. In March for example, we were down 11.4% from February, which is no small number. This means we are reversing trend due to lack of demand most often. Some and maybe most of these, will never be built.
We have entered a very bleak time for builders. Very little demand, very little affordability, and a whole lot of Homes for sale, foreclosed on, and nearing completion from past approved permits. Prices have gone up due to cost and labor, but they must now come down if they want to sell them. That move alone will stop many from building anything else until perhaps 2026, or later even. These numbers will get far worse, before they get better.
Key point!: Boomers drove a huge need for housing. But the supply of housing from retiring and dying boomers will accelerate.
Necessity?: Millennials and Zoomers are having fewer kids. Affordability is a huge issue.
“Rule of Law”: Immigration drove a huge need for multi-family but Trump put a screeching halt to immigration needs.
% Too High: Mortgage rates are still near 7.0 percent and tariff uncertainty adds to job loss fears.
Nothing is changing for the better anytime soon in housing, but almost surely for the worse short term anyway…
Permits aren’t free. I can’t imagine builders are pulling permits just to increase some overall perception of good times so that buyers will want to jump on the bandwagon. Random would-be buyers are unaware of such stats and even if they were, there’s no reason to think they wouldn’t buy another builder’s home.
The Industry, and not the Builder’s themselves. This props it up, it’s a potential sign of a good thing. When a positive arises, it commonly gets echoed.
Happy to hear you thankfully avoided a major surgery, and hope you are doing well Mish!
Fred: In construction, privately owned, 5+ units: 740K, a lower low, down from 1M in Aug 2023. Z to B: we aren’t buying your empty nests.
1M SPX: RSI might rise to a lower high, before falling under 40 for the first time since Feb 2009.
I have been seeing some Families, of Friend’s that are moving in with their kids, choosing to rent out the home. A source of income and no rent for the owner.
In fact, some and I hear more talk of late, have said or decided too already (owner passed) to keep it rented out for the money flow. Many are owned outright, or owe very little, so it’s a huge influx of money.
Things are a changing…
More evictions, while leaving their belongings behind and more shingle women with kids moving to section 8, when available. More families consolidate in one house, living together in mums house. like in Italy, to cut cost. Demand for Section 8 is high. Woke mayors, who didn’t do enough, might be ousted in the next elections. Real Prices and Rent might decay in the long run.
How about –
“Prices are high AND few are buying.” ?
S, D, P
Deflation is good for everyone except merchants carrying inventory on credit.