Homebuilding Is Flatlining, but Renters Are Finding More Leverage

The lack of people in the market to build a new home has affected homebuilding numbers. It sank in February to a five-month low due to uncertainty about tariffs, which poses a risk to costs. 

Residential construction data showed that while completions rose, permits were roughly flat and homebuilding projects fell. This suggests that builders are working to close out existing projects ahead of the uncertainty—and optimistically maintaining the permit pipeline while exercising more caution on starting homes right now.

One bright spot for hopeful builders, sellers, and buyers alike, interest rates have largely steadied this week despite last week’s inflation surprise, with the 10-year yield hewing close to 4.5%. 

As a result, mortgage rates fell modestly for a fifth week. Although rates have occupied a fairly narrow band since the end of 2024, it’s still a good idea for home shoppers to do some scenario planning or rate-proofing their home budget as they approach the spring season.

It’s best to consider how a swing in mortgage rates will affect your home price target and budget, in advance. In turn, it will help you adjust more nimbly if rates rise during your home search.

January existing-home sales data not only provides our first look at 2025, but we also see how more elevated mortgage rates have affected buyers and sellers. Although sales pulled back from December’s high, they continue to climb from a year ago, suggesting that some shoppers have accepted higher rates.

The Realtor.com® weekly housing data showed ongoing seller activity, although new listings growth wasn’t quite as robust as last week. Still, the availability of for-sale homes continued to increase, and home list prices remained steady to slightly lower. Perhaps most helpful for home shoppers, the market is not quite as brisk as one year ago, with typical time on the market up by just less than a week. 

Finally, the Realtor.com January Rental Report shows that rent declines moderated as rents stabilized in January. Despite the steadiness, the monthly costs of renting versus buying are still tipped heavily in favor of renting. The exception is in Pittsburgh and Detroit. Realtor.com data found it’s cheaper to buy a home in those metros than it is to rent.