Housing Starts Surged 15.8% in December to 1.50 Million Units
Min 1: Total 2024 Housing Starts Declined 3.9%
Total housing starts for 2024 were 1.36 million, marking 3.9% decline from 1.42 million total from 2023 according to NAHB analysis. While December was solid month for apartment starts, sector ended 2024 down 25% in terms of total starts according to NAHB Chief Economist Robert Dietz. In December and on three-month moving average basis, there were 1.7 apartments completing construction for every one apartment starting construction. Multifamily construction will stabilize later in 2025 as more deals pencil out with industry supported by low national unemployment rate. Single-family completions ended 2024 up 2.2% while multifamily completions ended 2024 up 35%. Within multifamily, missing middle consisting of two- to four-unit completions up 42.5% for total of 16,600 duplexes through quadplexes. Like ongoing strength for townhouse construction, market data indicates that with zoning reform more medium density housing can be built in markets where such demand exists.
Min 2: Single-Family Permits Up 6.6% for Full Year
Total permits for 2024 were 1.47 million, 2.6% decline from 1.51 million total from 2023. Single-family permits in 2024 totaled 981,000 up 6.6% from previous year—positive sign for 2025 according to NAHB. Overall permits decreased 0.7% to 1.48 million unit annualized rate in December and were down 3.1% compared to December 2023. Single-family permits increased 1.6% to 992,000 unit rate but were down 2.5% in December compared to previous year. Multifamily permits decreased 5% to 491,000 pace. Regionally permits were 1.5% higher in Northeast, 3.5% higher in Midwest, 3.1% lower in South and 6.6% lower in West. Industry expects to see slight gain for single-family home building in 2025 because of persistent housing shortage and ongoing solid economic conditions according to NAHB Chairman Carl Harris.
Min 3: Number of Apartments Under Construction Down 21%
Number of single-family homes under construction was down 5.3% from year ago at 641,000 homes. Number of apartments under construction was down 21% from year ago at 790,000. Count of apartments under construction peaked in July 2023 at 1.02 million and has been trending lower since that time. On regional basis for 2024 year, combined single-family and multifamily starts were 9.1% higher in Northeast, 0.1% lower in Midwest, 5.2% lower in South and 7.7% lower in West. Northeast posted strongest regional performance as Middle Atlantic markets including Illinois, New York, New Jersey, and Connecticut showed sustained construction activity. South posted largest decline despite historically being strongest region for construction activity reflecting oversupply corrections in Florida and Texas markets. West decline of 7.7% concentrated in California and Pacific Northwest where high costs and regulatory challenges constrained development.
Min 4: Missing Middle Housing Up 42.5%
Within multifamily completions, missing middle consisting of two- to four-unit properties jumped 42.5% to 16,600 duplexes through quadplexes in 2024. Like ongoing strength for townhouse construction starting 179,000 homes over last four quarters up 1% from prior period, market data indicates with zoning reform more medium density housing can be built in markets where demand exists. Townhouses made almost 20% of all single-family housing starts for third quarter. Minneapolis eliminated single-family zoning in 2020 permitting duplexes and triplexes everywhere while removing parking minimums and streamlining permitting, producing housing at triple national rate while maintaining stable rents for seven years per Pew data. Missing middle housing provides critical supply at price points between single-family detached homes and large apartment buildings, addressing affordability challenges while fitting into existing neighborhood fabric. Cleveland creating new Department of Development to manage 18,000 vacant parcels totaling 6,000 acres could unlock significant missing middle development opportunities.
Min 5: Target Build-to-Rent Single-Family Development
The 3.3% December increase in single-family starts combined with 6.6% full-year permit growth creates opportunity for investors pivoting into build-to-rent communities. Institutional investors like Invitation Homes becoming net sellers for sixth consecutive quarter of existing scattered-site portfolios while shifting capital to purpose-built rental communities. An investor who partners with regional builder to develop 100-unit build-to-rent community in growing Midwest market deploys $22 million total ($220,000 per unit all-in cost including land, construction, infrastructure). Pre-lease 80% of units at $1,800 monthly rent generating $1.728 million annual revenue. Debt financing at 65% LTV ($14.3 million) at 6.5% runs $930,000 annually while operating costs estimated $600,000 leaves $198,000 net cash flow on $7.7 million equity representing 2.6% initial cash-on-cash. Value proposition comes from holding through lease-up and stabilization—property stabilized at 95% occupancy valued at 5.5% cap rate generates $31.5 million valuation on $1.728 million annual NOI, delivering $9.5 million equity gain over $7.7 million invested representing 123% returns over 24-month development cycle.
The Takeaway
Housing starts surged 15.8% in December to 1.50 million units marking highest rate since February 2024 as single-family rose 3.3% to 1.05 million while multifamily jumped 61.5% to 449,000 despite full-year declines, with December closing strong despite high mortgage rates, elevated builder financing costs, and lack of buildable lots. Total 2024 housing starts declined 3.9% to 1.36 million from 1.42 million in 2023 as multifamily sector ended down 25% with 1.7 apartments completing for every one starting, though multifamily construction will stabilize later in 2025 as more deals pencil out supported by low unemployment. Single-family permits up 6.6% for full year to 981,000 providing positive sign for 2025 though total permits declined 2.6% to 1.47 million, with December permits down 0.7% to 1.48 million as regional data showed Northeast up 1.5% while West down 6.6%. Number of apartments under construction down 21% from year ago to 790,000 after peaking at 1.02 million in July 2023 while single-family under construction down 5.3% to 641,000, with regional starts showing Northeast up 9.1% while South down 5.2% and West down 7.7% for full year. Missing middle housing up 42.5% to 16,600 duplexes through quadplexes as zoning reform enables more medium density matching townhouse strength at 179,000 starts (20% of single-family), with Minneapolis example showing triple national production rate after eliminating single-family zoning. Investors partnering with regional builders to develop 100-unit build-to-rent community at $22 million ($220,000 per unit) with 65% LTV financing generate $198,000 initial cash flow on $7.7 million equity, but value comes from stabilization at 95% occupancy creating $31.5 million valuation at 5.5% cap delivering $9.5 million equity gain representing 123% returns over 24-month development cycle.
