Japan Housing Starts Drop More than Expected

Japan’s housing starts fell 4.9% yoy in February 2026, worsening from a 0.4% decline in the previous month and slightly missing market expectations for a 4.7% drop. This marked the fourth straight month of contraction and the steepest decline since last November, pointing to sustained weakness in the property sector amid higher construction costs and soft demand. Declines were broad-based across all segments, including rental housing (-2.7% vs -1.5% in January), owner-occupied homes (-4.7% vs 6.6%), built-for-sale housing (-8.8% vs -4.8%), prefabricated housing (-2.2% vs 5.1%), and two-by-four homes (-7.7% vs 8.7%).

Japan’s housing starts fell 0.4% yoy in January 2026, easing from a 1.3% drop in the previous month and beating market expectations of a 1.6% decline. It marked the third consecutive month of contraction, though the pace was the mildest since July 2024. Rental housing starts declined at a slower rate (-1.5% vs -3.4% in December). Meanwhile, owner-occupied homes rebounded (6.6% vs -1.8%), as did prefabricated housing (5.1% vs -6.1%). Starts for two-by-four homes also accelerated (8.7% vs 2.8%). In contrast, built-for-sale housing fell 4.8%, reversing a 1.9% increase in December.

Japan’s housing starts fell 1.3% year-on-year in December 2025, easing sharply from an 8.5% drop in the previous month and beating market expectations of a 4.1% decline. While marking the eighth contraction of the year, it was the mildest pace since September 2024. The slowdown reflected softer declines in starts for owner-occupied homes (-1.8% vs. -9.5% in November) and rental units (-3.4% vs. -5.5%). In contrast, built-for-sale housing returned to growth (1.9% vs. -11.3%), alongside a rebound in two-by-four homes (2.8% vs. -2.7%). Meanwhile, prefabricated housing contracted more sharply (-6.1% vs - 4.1%).