A Slight Rise in Single-Family Starts as Economic Uncertainty Persists

As we move into 2025, the housing market continues to navigate a mix of economic forces shaping home construction, affordability, and inventory. The latest forecast from the National Association of Home Builders (NAHB) suggests a modest increase in single-family housing starts amid ongoing regulatory and financial challenges. While demand for homeownership remains strong, economic uncertainty, rising mortgage rates, and supply chain issues continue to influence the market.

Key Takeaways from the 2025 Housing Market Forecast

1. Single-Family Starts Expected to See a Small Increase

Builders are facing both positive and negative policy shifts. On the one hand, regulatory reform and the potential extension of the 2017 tax cuts may boost the business climate. On the other, tariffs and immigration restrictions could increase costs for materials and labor. The NAHB predicts a 0.2% increase in single-family home construction in 2025, bringing annual housing starts to approximately 1.01 million units, with an additional 4% rise in 2026.

2. Multifamily Housing Construction Decline

With interest rates remaining volatile, the multifamily sector faces challenges in financing. Multifamily starts are expected to decline by 11% in 2025 before stabilizing in 2026, when they are forecasted to rebound by 6%.

3. Remodeling Market Expected to Expand

With an aging housing stock and record-high levels of home equity, residential remodeling is forecasted to grow by 5% in 2025 and an additional 3% in 2026. Homeowners are increasingly opting to renovate rather than move due to the current mortgage rate environment.

The Growing Value of Homeownership

Despite affordability concerns, Americans continue to see homeownership as a long-term financial goal. A Zonda survey reveals that:

✔ 20% of renters are willing to pay up to $500 more per month for a mortgage.

✔ More than 10% would pay up to $1,000 more to own a home.

✔ Over 10% would pay more than $1,000 above their current rent to transition from renting to homeownership.

These findings align with government data showing the stark contrast in net worth between homeowners and renters. The average net worth of a homeowner is $396,200, compared to just $10,400 for renters, demonstrating the long-term financial benefits of owning a home.

Housing Market Balance: More Inventory, Moderate Demand

Housing inventory is recovering, shifting the market toward a more balanced state. Realtor.com’s Danielle Hale reports that newly listed homes increased by 10.8% year-over-year in January 2025. The supply of available homes has risen from a 2.3-month supply in 2021 to a projected 4.1-month supply this year, indicating a slow but steady shift from an extreme seller’s market.

Mortgage Trends: The Lock-In Effect is Gradually Fading

• 83% of outstanding mortgages have rates below 6%, with 55% below 4%.

• By the end of 2025, 75% of outstanding mortgages will still be below 6%.

• The “mortgage rate lock-in effect” is slowing, but affordability remains a concern for homebuyers.

While the resale market is improving, new home sales remain strong as buyers seek more options. In 2024, new home sales represented 14.5% of all home sales, the highest share since 2005. This trend is expected to continue in 2025, although competition from existing home sellers will increase.

What This Means for Buyers and Sellers in the Atlanta Market

At Clareo Real Estate, we keep a close eye on these market trends to help our clients make informed decisions. Whether you’re a homeowner looking to sell, a buyer navigating mortgage rates, or an investor considering remodeling, understanding these shifts in inventory, construction, and lending conditions is crucial.

Thinking About Buying or Selling? Let’s Talk!

If you’re planning to buy or sell in the North Atlanta metro area, our expert team at Clareo Real Estate is here to guide you every step of the way.

✔ For Home Sellers: We offer a proven listing strategy to get you top dollar in today’s market.

✔ For Home Buyers: We help you navigate mortgage rates, negotiate the best deal, and find your dream home.

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Credits & References

This article is based on insights from the National Association of Home Builders (NAHB) and industry experts:

• Elizabeth Thompson, AVP, Media Relations, NAHB | [email protected]

• Stephanie Pagan, Director, Media Relations, NAHB | [email protected]

• Original Article: NAHB: A Slight Rise in Single-Family Starts