Japan Housing Starts Unexpectedly Drop

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%).

Japan’s housing starts fell 8.5% year-on-year in November 2025, missing market forecasts of a 0.4% increase and reversing a 3.2% gain in the previous month. It marked the seventh decline recorded this year, as weakness was broad-based across housing categories, including owned homes (-9.5% vs -8.2% in October), rented units (-5.5% vs 4.2%), built-for-sale homes (-11.3% vs 14.8%), prefabricated housing (-4.1% vs 9.2%), and two-by-four homes (-2.7% vs -3.8%).

Japan’s housing starts rose 3.2% year-on-year in October 2025, defying market expectations of a 5.2% decline and reversing a 7.3% fall in September. It was the first annual increase since March, driven by rebounds in rented units (4.2% vs -8.2%), built-for-sale homes (14.8% vs -8.3%), and prefabricated housing (9.2% vs -0.4%). However, weakness persisted in owned homes (-8.2% vs -5.6%), while issued units slumped sharply (-36.3% vs 53.7%) and two-by-four homes also turned negative (-3.8% vs 2.1%).