Broadly speaking, home prices are rising to their highest level in five months

US new home construction rose to a five-month high in December as homebuilders ramped up production to take advantage of lower borrowing costs.

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Home construction starts rose 6.2% to an annual pace of 1.4 million homes in December, according to figures released by the government on Wednesday, which were delayed by the federal shutdown in the fall. That exceeded all estimates from a Bloomberg survey.

The progress was broad-based, with both single-family home starts and condominium projects increasing at year’s end. The number of single-family home starts was the highest since February.

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The stronger construction numbers indicate that builders became more confident at the end of the year, even as they continued to sell an inflated inventory of new homes. However, for the full year, a fourth straight annual decline began.

Economists at Pantheon Macroeconomics and Santander Capital Markets suggested in their notes on Wednesday that the gains may not be permanent at the end of 2025, putting them partly attributable to relatively mild weather.

Ben Ayers, senior economist at Nationwide, suggested rougher weather in early 2026 would hurt upcoming housing results before construction picks up later this year.

“Despite the increase in starts and permits, homebuilder survey results in early 2026 were relatively optimistic,” Ayers said in a note. “This suggests that the increase in starts could fade out in the first quarter, especially given the likely weather impacts.”

In December, building permits, which indicate future construction, rose 4.3% to an annual pace of 1.45 million, the highest since March, government data showed. Permits for single-family homes fell slightly.

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Across the country, housing starts were led by the West, which rose 37.4%, the biggest gain in nearly a year. In the South, the largest U.S. homebuilding region, construction fell 2.8% to an annual pace of 741,000.

On Wednesday, the government also published delayed housing data for November. The data shows that the recovery started that month after a weak October.

New home construction data is volatile and the report shows that 90% are confident that the monthly change ranges from a decline of 4.5% to a gain of 16.9%.

A separate report Wednesday showed US industrial production rose in January, the highest in almost a year, fueled by a broad-based increase in output and renewed healthy progress in utility production.

In the meantime orders business equipment rose more than expected in December, indicating solid capital investment late last year as trade policy uncertainty gradually subsided.