U.S. single-family homebuilding fell sharply in January as snowstorms and freezing temperatures disrupted construction, with further recovery constrained by rising costs from tariffs and high mortgage rates.
Single-family housing starts dropped 8.4% to a seasonally adjusted annual rate of 993,000 units, the Commerce Department reported. December’s data was revised higher to 1.084 million units from 1.050 million. Harsh winter weather also impacted retail sales and the labor market.
Despite support from a shortage of existing homes, builders face new hurdles from President Donald Trump’s protectionist trade policies. In his early weeks, Trump imposed a 10% tariff on Chinese imports and raised tariffs on steel and aluminum to 25%. A 25% tariff on imports from Mexico and Canada was suspended until March.
The National Association of Home Builders/Wells Fargo Housing Market Index fell to a five-month low in February, with concerns over tariffs affecting costs. About 32% of appliances and 30% of softwood lumber come from international trade, adding to builders’ worries.
Additionally, mortgage rates remain high, with the average 30-year fixed rate just under 7%, leading to a glut of new homes. Inventory is at its highest level since late 2007, posing another challenge for builders.
Permits for future single-family housing construction remained unchanged at 996,000 units in January, indicating ongoing uncertainty in the housing market.
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