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%).

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