Zillow reports that housing starts rose in December and permits ticked higher. On the surface, that looks like momentum, but let’s zoom out …
One, new construction finished below the prior year in 2025.
Two, single-family starts were down nearly 7% for the year and 9% year-over-year in December.
And three, multifamily, meanwhile, rebounded sharply—up 18% in larger projects—even as rent growth slowed.
This isn’t acceleration, but more recalibration.
Builders slowed single-family production because sales bounced along the bottom. Homes took longer to move, and inventory built up in key regions—especially the South. Price growth cooled.
The modest year-end uptick signals cautious optimism, not conviction or confidence.
Disciplined builders understand this phase of the cycle. When absorption slows, you don’t chase starts. You protect velocity. You tighten specs. You preserve capital.
Rising multifamily supply and flattening rents will keep pressure on margins. Sideways home values in 2026 won’t bail out weak underwriting.
Look at it this way: This is another positioning environment, and if you treat it as a structural reset rather than a short-term slump, you can be prepared when confidence returns.
