Lumber Distributors NAICS 423310

May 23, 2025 - Single-Family Housing Starts Decline

• The number of building permits issued for single-family, privately-owned housing units decreased 5.1% in April 2025 compared to March and fell 6.2% year-over-year. Single-family housing starts dropped by 1.6% month-over-month and were down 12% compared to April 2024. Single-family housing completions declined 5.9% in April from the previous month and decreased 12.3% year-over-year. Housing starts in April were pressured by tariff-related economic uncertainty, high mortgage rates, and rising costs for building materials, according to the National Association of Home Builders (NAHB).
• US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise.

• Demand for building design services declined in April compared to March, according to a May report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 43.2 in April compared to March’s reading of 44.1. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 48 in April compared to 47.7 in March, and the index for the value of new design contracts increased from 42.4 to 43.3. The AIA’s Chief Economist, Kermit Baker said, “Uncertainty as to the economic outlook continues to hold back progress on new construction projects. Despite the slowdown in billing activity, architecture firms continue to navigate this business cycle quite effectively, as staffing at firms remains relatively stable and project backlogs are holding up better than expected.”
• Multifamily developer confidence declined in the first quarter of 2025, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell three points in Q1 2025 to 44 compared to the first quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 82 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, and regulatory difficulties. More than half of multifamily builders surveyed said their suppliers had raised prices in response to announced, enacted, or anticipated tariffs. While multifamily construction activity is expected to remain weak for the remainder of the year, the NAHB projects that a modest recovery will take hold in 2026.