US DATA: Housing Activity Closes Out 2025 Strong, But 2026 Pickup Likely Limited

New residential construction closed out a weak 2025 with a strong burst of activity, with housing permits and starts in December easily beating expectations. This will result in better estimates for residential investment in the national accounts (which are currently seen to be flat in Q4 2025 following two firmly negative quarters, at least per the Atlanta Fed's GDPNow coming into the day).

• In a combined November-December report that was delayed due to the federal government shutdown last year, the report showed a dip in permitting in November (1,388k after 1,411k in Oct, all on a seasonally-adjusted annual rate basis) followed by a jump in December to the highest rate in 9 months (1,448k, vs 1,400k expected).
• This was led by a surge in multi-unit permitting: 567k marked a 28-month high (single-family permitting was flat between October and December, despite a pickup in homebuilder sentiment at the end of the year that we now know was short-lived).
• Starts also picked up strongly in December to 1,404k, compared with the 1,322k in November and 1,272k in October - which had been the 2nd worst month since the Covid pandemic. This showed solidity in both single-family (981k) and multi-unit (423k) starts.
• The improvement in permits in particular is a positive signal for future activity. This is far from a renaissance for the beleaguered housing sector, though it offers some evidence that October's weakness was not the start of a new downtrend.
• 2026 so far has thus seen a setback in homebuilder confidence amid a residential real estate market that showed signs of thawing in the latter months of 2025, with sales picking up amid a dip in mortgage rates - we would expect this to mean that a housing boom isn't in the offing for early 2026, with affordability/rates remaining a central issue.