Bank of America Projects 2% Single-Family Decline in 2026 After 9% Drop
December 2025 housing starts climbed 6.2% month-over-month to a 1.40 million SAAR, yet remain down 7.3% year-over-year as single-family starts dropped 9% to 981,000 units. Bank of America projects single-family starts will slide a further 2% in 2026 with total starts of 1.37 million, prolonging headwinds for home-construction ETFs.
1. December Housing Starts Data
December 2025 housing starts increased 6.2% month-over-month to a 1.40 million SAAR but remain 7.3% below year-ago levels, highlighting persistent weakness in overall residential activity.
2. Single-Family Versus Multifamily Performance
Single-family starts, accounting for roughly 70% of total, fell 9% year-over-year to 981,000 units, while multifamily starts rebounded monthly but stayed down 3% annually; regional data show a 37.4% surge in the West versus 16.1% and 13.2% declines in the South and Midwest respectively.
3. Permits and Builder Sentiment
Building permits rose 4.3% month-over-month, but single-family permits declined 10.9% year-over-year even as multifamily permits climbed 15.5%; the NAHB confidence index slipped to 36 as over one-third of builders cut prices and 65% offered incentives while buyer traffic remained weak.
4. Bank of America Forecasts and Outlook
Bank of America projects single-family starts to fall another 2% in 2026, with total starts reaching 1.37 million before recovering to 1.41 million in 2027; mortgage rates are forecast to ease to 6.1% while purchase applications rise 9.1% year-over-year.