The housing market ended 2024 on a strong note, with single-family construction rising in December despite ongoing economic pressures such as high mortgage rates, elevated financing costs, and a shortage of buildable lots.

According to a recent report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, overall housing starts surged by 15.8% in December, reaching a seasonally adjusted annual rate of 1.50 million units—the highest level since February 2024.

Single-Family and Multifamily Construction Trends

While single-family housing starts increased by 3.3%, reaching a 1.05 million annualized rate, the multifamily sector experienced a much sharper rise. Multifamily starts, which include apartment buildings and condominiums, jumped by 61.5% in December, hitting a 449,000-unit pace.

Despite this late-year boost, total housing starts for 2024 reached 1.36 million, marking a 3.9% decline from 2023's total of 1.42 million. However, single-family construction showed resilience, with 1.01 million new starts in 2024—up 6.5% from the previous year. The National Association of Home Builders (NAHB) predicts that single-family homebuilding will see modest growth in 2025, driven by ongoing housing shortages and a strong economic backdrop.

In contrast, multifamily starts for 2024 saw a significant 25% drop from the previous year. As of December, there were 1.7 apartments completing construction for every new apartment breaking ground, signaling a slowdown in multifamily expansion. Experts anticipate that multifamily construction will stabilize in late 2025, supported by a low national unemployment rate and improving financial conditions.

Completions and Regional Trends

Single-family home completions in 2024 ended on a positive note, rising 2.2% compared to the previous year. Multifamily completions saw even stronger growth, rising 35% year-over-year, with two- to four-unit buildings ("missing middle" housing) increasing by 42.5%. This surge indicates a growing demand for medium-density housing, which could expand further with zoning reforms.

Regionally, combined single-family and multifamily starts for 2024 varied across the country:

• Northeast: +9.1%
• Midwest: -0.1%
• South: -5.2%
• West: -7.7%

Permits and Future Outlook

Building permits, which indicate future construction activity, declined by 0.7% in December to an annualized rate of 1.48 million units. Compared to December 2023, permits were down 3.1% overall, though single-family permits saw a slight 1.6% increase to 992,000 units. Multifamily permits dropped 5% to a 491,000-unit pace.

For the full year, total permits in 2024 reached 1.47 million, reflecting a 2.6% decline from 2023. However, single-family permits totaled 981,000—up 6.6% from the previous year, which is a positive indicator for 2025.

The number of single-family homes under construction stood at 641,000 in December, down 5.3% year-over-year. Meanwhile, the number of apartments under construction dropped 21% from the previous year, reaching 790,000 units. The multifamily pipeline peaked in July 2023 at 1.02 million units and has been steadily declining since.

Despite economic headwinds, the housing market showed resilience in December, with single-family home construction continuing its upward trajectory and multifamily completions reaching a high point. While 2024 saw an overall decline in total housing starts and permits, the steady growth in single-family construction and missing middle housing signals optimism for 2025. With ongoing demand and a persistent housing shortage, the market is expected to stabilize in the coming year.

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A limited supply of existing inventory, coupled with strong demand, helped new-home sales finish 2024 on an upward trajectory, even as buyers continued to navigate affordability concerns.

Sales of newly built single-family homes in December increased by 3.6%, reaching a seasonally adjusted annual rate of 698,000. This figure, based on data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, represents a 6.7% increase compared to December 2023. Throughout the year, new-home sales totaled 683,000, marking a 2.5% rise over 2023.

Looking ahead to 2025, forecasts suggest a modest gain in new-home sales, supported by stable macroeconomic conditions and a robust labor market. Additionally, builders remain cautiously optimistic about the construction industry, anticipating potential regulatory changes following the 2024 election that could ease constraints and streamline the building process.

New-home sales are recorded at the time of a signed contract or accepted deposit, regardless of construction stage. The December reading of 698,000 units represents the annualized sales rate if this pace were to persist for 12 consecutive months.

Inventory levels for new single-family homes continued their steady rise, reaching 494,000 units in December—a 10% increase from the previous year. This equates to an 8.5-month supply at the current construction pace, ensuring ample options for prospective buyers. Notably, the number of completed, move-in-ready homes rose by 46% year over year, totaling 118,000 units.

The combined inventory for new and existing homes remained constrained, with new-home supply at 8.5 months and the resale market at just 3.1 months. This brought the overall housing market's supply to a four-month level—the lowest since April 2024. The market has not approached the six-month benchmark, typically indicative of equilibrium between supply and demand, since 2012.

The median sales price for a new home in December was $427,000, reflecting a 2.1% increase from a year earlier. While prices have edged up, builders continue to find ways to offer more affordable options to meet buyer demand.

Regionally, the Midwest experienced the most significant growth in new-home sales, posting a 19% year-over-year increase. The Northeast saw a 1.7% uptick, while the West recorded a 2.6% gain. The South, however, experienced a slight decline of 0.2%, though it remained the largest market for new-home sales.

As 2025 begins, the new-home market remains well-positioned for continued momentum. With inventory levels expanding, demand staying strong, and economic conditions holding steady, buyers are expected to have more opportunities to explore new construction homes in the months ahead.

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The housing market continues to show strength as new-home sales climbed again in December, reaching a seasonally adjusted annual rate of 698,000. This marks a 3.6% increase from November 2024 and a 6.7% rise from December 2023. With a total of 683,000 new homes sold in 2024—up 2.5% from the previous year—this upward trend signals continued momentum for the market in 2025.

While the median sales price of new homes sold in December increased to $427,000, the overall median price for 2024 stood at $420,100, lower than 2023's median of $428,600. More affordable inventory is fueling this growth, with 20% of December's sales occurring in homes priced below $300,000, up from 15% a year ago. Despite persistently high mortgage rates, new-home sales have remained strong.

The Northeast and Midwest experienced the most significant growth in new-home sales, with year-over-year increases of 25.9% and 40.3%, respectively. The South, which continues to lead the nation in total new-home sales, saw a modest annual increase of 0.5%, making up 60.6% of all new-home transactions. Meanwhile, the West bounced back from a slower November, posting a 20.3% month-over-month increase and a 6.9% year-over-year rise.

The supply of new homes for sale at the end of December reached 494,000 on a seasonally adjusted basis. This marks the fifth consecutive month of inventory growth, reflecting a 10% increase from December 2023. New construction homes now represent 30% of all available inventory, maintaining a steady share despite fluctuations throughout the year.

While months of supply dipped slightly from 8.9 to 8.5 due to higher sales activity, the market remains well-stocked and favorable for buyers. With steady inventory and strong completion rates, new-home buyers have more options than ever.

A promising development for homebuyers is the increase in move-in-ready homes. The share of completed homes available for sale remains at 25%, aligning with pre-pandemic levels. Meanwhile, the proportion of homes still under construction has declined to 53.8%. This shift allows buyers to tour and purchase homes that are already finished, reducing uncertainty and wait times.

The latest new-home sales data presents an encouraging landscape for buyers, who can benefit from a well-supplied market, competitive pricing, and more move-in-ready options. Additionally, builders are providing financial incentives, including mortgage rate buy-downs, which can offer relief from elevated borrowing costs.

With more affordable inventory and favorable conditions, now is a great time for homebuyers to explore new construction options. As the market heads into 2025, new-home sales are expected to remain a vital component of the housing sector's continued growth.

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Top 10 New Construction Home Features for High ROI

With housing inventory remaining tight, more buyers are turning to new construction homes to meet their needs. Customizing a brand-new home offers unique advantages, but with a vast array of features and upgrades available, buyers need to be strategic about where to invest their money. Selecting the right features can maximize return on investment (ROI) and increase resale value.

To help buyers make the best decisions, industry experts have identified the top features that offer the highest ROI in new construction homes.

1. Premium Kitchen Cabinets

The kitchen is the heart of the home, and high-quality cabinetry is a worthwhile investment. Opting for floor-to-ceiling cabinets with premium hardware and soft-close drawers not only increases storage but also enhances visual appeal. White shaker-style cabinets remain a popular choice, while accent colors on islands provide a trendy yet timeless touch.

2. Outdoor Kitchens and Living Spaces

Outdoor living spaces have surged in popularity, with features like built-in grills, fire pits, and extended patios creating an inviting entertainment space. According to industry reports, outdoor kitchens deliver up to a 71% ROI. Adding a wood-burning fireplace or covered seating area makes the space more functional year-round.

3. Oversized and Insulated Garages

A larger garage offers flexibility for storage, workspaces, and even vehicle accommodations like RVs. Insulated garage doors improve energy efficiency and noise reduction. Investing in a high-quality garage door replacement can yield a significant ROI, often exceeding 90%.

4. High-Quality Lighting Fixtures

Lighting choices can set the tone for a home. Bold pendant lights over kitchen islands and sconces in living spaces add character and elegance. Gold and brass fixtures are trending, while LED Edison-style bulbs offer energy efficiency with vintage charm.

5. Spa-Inspired Master Bathrooms

Modern homebuyers prioritize spacious and functional master baths. Large, walk-in showers with multiple showerheads are preferred over oversized soaking tubs. Additionally, layouts that connect the master bath to a laundry room enhance convenience and efficiency.

6. Durable and Stylish Flooring

Flooring is one of the first things buyers notice. Wood-look tile, engineered vinyl plank (EVP), and patterned ceramic tiles offer durability, water resistance, and aesthetic appeal. Carpet is being replaced with hardwood alternatives in bedrooms and living areas to enhance long-term value.

7. Energy-Efficient Windows and Air Filtration

Energy-efficient windows reduce heating and cooling costs while enhancing indoor comfort. Investing in high-performance glass and air filtration systems with advanced filters improves air quality and home efficiency, making the property more appealing to eco-conscious buyers.

8. Flexible Living Spaces

The demand for adaptable home layouts continues to grow. Dedicated home offices, study nooks, and flex spaces for exercise or hobbies add functionality. With multigenerational living on the rise, additional private living spaces can significantly boost home value.

9. Kid-Friendly and Family-Oriented Features

Homes with finished basements, bonus rooms, or backyard play areas sell faster. Listings highlighting features like nearby parks, pools, and playgrounds often command a premium. Unique customizations, such as walk-in closets converted into playhouses, are increasingly popular.

10. Curb Appeal Enhancements

First impressions matter, and curb appeal can make or break a home's resale potential. Upgrading the front door, landscaping, and entryway lighting creates a welcoming aesthetic. Well-designed garage entrances also contribute to the overall appeal.

Guiding Buyers Through the Process

New construction can be overwhelming, but real estate professionals can provide invaluable guidance by helping buyers prioritize features that align with their lifestyle and budget. Advising clients on high-ROI selections ensures their investment pays off both in daily enjoyment and long-term resale value.

By focusing on key upgrades that offer lasting benefits, buyers can create a home that not only meets their immediate needs but also holds strong appeal in the competitive real estate market.

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