January Home Construction Drops as Winter Weather Slams Building Industry

New single-family home construction declined 2.8% in January as severe winter weather disrupted building activity nationwide. The construction industry continues facing challenges from material costs, labor shortages, and fluctuating mortgage rates.

WASHINGTON – Construction of new single-family homes declined in January as brutal winter conditions disrupted building activity across the nation, according to new federal data that suggests recovery may be slow.

The Commerce Department’s Census Bureau reported Thursday that single-family home construction starts – which represent most residential building activity – decreased 2.8% to a seasonally adjusted annual pace of 935,000 units during January. December figures were also revised downward, showing construction activity at 962,000 units rather than the previously reported 981,000-unit pace.

The data release was postponed due to last year’s federal government shutdown. Construction activity plummeted dramatically in the Northeast, falling 33.3%, while the South – the nation’s most populated region – saw a 4.6% decline. The Midwest and Western regions posted increases. Severe snowstorms and freezing temperatures battered much of the country throughout January.

Compared to the same month last year, single-family construction starts fell 6.5%. The homebuilding sector continues struggling with multiple challenges including tariffs on imported materials like lumber and bathroom fixtures, workforce shortages linked to immigration restrictions, and elevated borrowing costs.

While mortgage interest rates have dropped this year, encouraging home buyers, the ongoing U.S.-Israeli conflict with Iran is driving up oil costs and increasing U.S. Treasury bond yields. Mortgage rates typically follow the 10-year Treasury benchmark.

Builder confidence remains low, indicating that single-family home construction is unlikely to see substantial improvement soon.

Multi-family housing projects with five or more units – a highly unpredictable market segment – jumped 29.1% to an annual rate of 524,000 units in January. Total housing construction increased 7.2% to 1.487 million units annually, representing a 9.5% year-over-year gain.

Building permits for future single-family construction dropped 0.9% to 873,000 units in January, down 11.6% from the previous year.

Permits for multi-family projects with five or more units plunged 13.4% to 453,000 units annually. Overall construction permits fell 5.4% to 1.376 million units, declining 5.8% compared to January of last year.

Housing investment, which encompasses all homebuilding activity, has now declined for four consecutive quarters.