Home Starts April 2025: Metrics Show Wear and Tear

With the spring selling season in full swing, single family start rates are consistent with the defensive tone of 1Q25 builder guidance.

May 19, 2025

Some cheap lumber would be nice…

With the 1Q25 earnings season underscoring weakness in orders and margins across most homebuilders, we heard more than a little defensiveness on the cycle from the major builders on earnings calls (see Credit Snapshot: D.R. Horton (DHI) 4-28-25, Credit Snapshot: Lennar (LEN) 4-15-25,and links below).
The tariff X factor weighs on the residential construction outlook from multiple angles including materials (lumber, aluminum, steel) and the potential for tightening labor supply (subcontractor costs). A stubborn UST curve sees the 10Y UST well above the Sept 2024 lows with the 30Y today briefly rising to 5% (5.037%) before dipping back under the 5.0% line. Mortgages have been hanging around the high 6% range depending on what survey you look at. The US downgrade did not help (see Footnotes & Flashbacks: State of Yields 5-18-25, Mini Market Lookback: Tricky Ingredients, Shifting Moods 5-18-25).
April brought a sequential decline of -2.1% for single family starts and YoY at -12.0% while the always-lumpy multifamily subsector (5 units or more) was +11.1% sequentially and +28.8% YoY. Working capital management and balancing starts with deliveries is a core part of major builder strategies, so any potential slide in volumes is easily managed from a cash flow perspective through inventory liquidation and adjustments to land spend.
For April, permits were weak with total permits -4.7% MoM and -3.2% YoY with single family -5.1% MoM and -6.2% YoY. The South is around 59% of single family permits and was -5.4% MoM and -9.1% YoY.
Total completions were -5.9% MoM and -12.3% YoY with single family at -8.0% MoM and -16.6% YoY. South single family declined by -9.3% sequentially and -14.5% YoY. Total single family under construction was down by -0.6 MoM but by -14.3% YoY. There is obvious weakness in the numbers.

The above chart frames the current 927K for single family starts which was down by -2.1% MoM and -12.0% YoY. Total starts overall was +1.6% sequentially and -1.7% YoY with Multifamily up by +28.8% YoY.

The South region at 58% of single family starts was +1.9% MoM but -14.8% YoY while the West as the #2 region was -18.7% MoM and -14.9% YoY. The YoY declines reflect the weakness in orders across many (not all) builders as reported in 1Q25 earnings.

The above chart plots total permits and total starts on a Not Seasonally Adjusted (NSA) basis, and we see total permits up for both total and single family. NSA Year-to-Date permits were -4.3% for total and -4.5% for single family. NSA is viewed as closer to what is going on in the trenches without the SAAR model assumptions.

For total starts and single family starts on an NSA basis, we see both higher MoM. The YTD NSA starts is -1.6% for total and -7.1% for single family.

The above plots the single family starts by region on an NSA basis. The two largest regions (South and West) saw the South slightly higher and the West slightly lower. The Midwest moved higher, and the small Northeast market rose.

The above chart updates running Multifamily starts. At +420K, March 2025 is up by +11.1% sequentially and up by +28.8% YoY. The 420K is above the long-term median of 337K, above the median from Jan 2009 to current (347K), and above the median from 2000 to 2008 (296K). The 1960s was a boom period for multifamily with the postwar explosion of urbanization.