The 2024 election offers both upside and downside risks for housing and home building , given both the scale and scope of policy change now underway in Washington , D . C . Regulatory reform and cost reduction offer the most upside risk for the persistent problems that plague the housing market , namely growing construction costs and poor housing affordability due to limited inventory . Extension of the 2017 tax cuts would also be a net positive for home builders and remodelers .

However , negative risks for residential construction include tariffs on imported building materials , concerns regarding immigration and workforce availability , and general policy uncertainty given the daily headlines of proposals and executive orders . The bond market also has long-run concerns over inflation and long-term government deficits As a result , home builder sentiment fell after a postelection gain . The NAHB / Wells Fargo HMI was 42 in February , down five points from January and the lowest level in five months . While builders hold out hope for pro-development policies , particularly for regulatory reform , policy uncertainty and cost factors created a reset for builders ’ 2025 outlook . Uncertainty on the tariff front helped push

builders ’ expectations for future sales volume down to the lowest level since December 2023 . Similarly , the NAHB Multifamily Production Index ( MPI ) remains below the breakeven level of 50 , although it did show signs of improvement at the end of 2024 by increasing seven points to a level of 48 . The MPI is pointing to eventual stabilization of the multifamily construction market in 2025 .

Reflecting the sentiment indicators , single-family starts in January decreased 8.4 % to a 993,000 seasonally adjusted annual rate ; 1.8 % lower than a year ago . Multifamily starts decreased 13.5 % to an annualized 373,000 pace . There were 669,000 multifamily completions in January , up 11 % from January 2024 . For each apartment starting construction ,

there are 1.8 apartments completing the construction process . Higher construction financing costs and elevated mortgage interest rates continue to hold back the housing market , and the future of interest rates will depend on inflation data and policy change . During the past 12 months , on a non-seasonally adjusted basis , the Consumer Price Index rose by 3.0 % in January . This was higher than the 2.9 % rate recorded in December and is a warning that policies that increase costs on the supply side of the market , like tariffs , may push inflation higher in 2025 and keep the Federal Reserve on an extended hold .