US Single-Family Housing Starts Rebound, but Challenges Loom
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WASHINGTON, Dec 18 (Reuters) — U.S. single-family homebuilding showed a notable recovery in November as the impact of hurricanes diminished, but experts caution that tariffs on imported goods and potential labor shortages due to mass deportations of immigrants may hinder new construction next year.
A report from the Commerce Department on Wednesday revealed a modest increase in permits for future single-family home construction, suggesting that residential investment may not significantly contribute to economic growth in the fourth quarter.

Despite the Federal Reserve’s recent efforts to cut borrowing costs, high mortgage rates remain a constraint on the housing market. "While we’re seeing progress, tariffs and immigration policies could worsen the situation," said John Doe, a housing market analyst. "The threat of tariffs and the possibility of mass deportations under President-elect Trump could have a lasting negative impact on homebuilders and their supply capacity."
Although the U.S. central bank lowered borrowing costs for the third consecutive time, it forecast fewer rate cuts next year, signaling a potentially more challenging environment for builders. "We expect the Fed’s reduced forecast for rate cuts to limit mortgage rate reductions, leaving homebuilders with less room for maneuver," noted Abiel Reinhart, an economist at JPMorgan.
Furthermore, economists express concerns about potential inflationary effects of certain policies from the incoming Trump administration. "We are less optimistic about the outlook, as we expect the proposed trade and immigration policies to weigh on homebuilders' supply capacity," said Bradley Saunders, North America economist at Capital Economics.
In November, single-family housing starts jumped by 6.4% to a seasonally adjusted annual rate of 1.011 million units. However, the housing market has faced challenges throughout the year, particularly due to a shortage of previously owned homes for sale. Although the Federal Reserve began cutting interest rates in September, the average rate for a 30-year fixed mortgage remains near 7%, tracking rising 10-year U.S. Treasury yields, which have been influenced by the economy’s resilience and concerns about inflation.
The National Association of Home Builders’ survey showed steady homebuilder sentiment in December, buoyed by hopes for fewer regulations under Trump’s administration. However, economists warn that tariffs, particularly on lumber, and labor shortages could escalate if Trump follows through with his proposed policies. The U.S. imports a significant amount of lumber from Canada, and Trump has suggested imposing a 25% tariff on imports from both Canada and Mexico. President Biden’s administration also raised tariffs on Canadian softwood lumber this year, further complicating the situation.
"Nations like Canada supply a significant portion of the lumber used in homebuilding, and higher tariffs could increase costs," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "Additionally, immigrant workers, who comprise about 18% of the construction workforce, are crucial to the industry."
Despite these challenges, single-family homebuilding in the South rebounded by 18.3% after being impacted by Hurricanes Helene and Milton in October. However, starts in the Northeast, Midwest, and West all declined, and overall single-family homebuilding fell 10.2% from a year ago. Multi-family housing starts plunged by 24.1%, while overall housing starts dropped by 1.8%, coming in below economists' expectations.
In terms of future construction, permits for single-family homes rose slightly by 0.1%, although regional variations were noted. The South saw a 1.8% increase in permits, while other regions experienced declines. Multi-family permits soared by 22.1%, contributing to a 6.1% overall increase in building permits.
The housing market’s slow recovery has been a drag on GDP for two consecutive quarters. With GDP growth forecasted at 3.2% in the fourth quarter, economists expect continued pressures on the housing sector, especially with the increasing number of houses approved for construction yet to be started.
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