Housing sector started 2026 with its worst historical record: construction starts plummeted 56%
The housing sector began 2026 with the worst start since records began. New project launches and construction starts reached historic lows, while new home sales retreated to levels not seen since 2013.
TL;DR
- Housing sector started 2026 with the worst performance on record, showing historic lows in new project launches, construction starts, and sales.
- Construction starts fell 56% year-on-year in January 2026, launches dropped 23%, and sales decreased 15%.
- The downturn is seen as a structural deterioration due to adverse macroeconomic and public policy environments, not a conventional cyclical adjustment.
- High financing costs, with average mortgage rates reaching 12.7% in February, are a major factor, increasing monthly payments significantly.
- The 'Mi Casa Ya' program, crucial for lower-income buyers, saw a drastic reduction in subsidies in 2025, making housing about 40% more expensive.
- The 23% increase in the minimum wage impacts both demand (raising VIS housing prices) and supply (increasing construction costs, especially labor).
- The market is seeing a recomposition, with non-VIS housing increasing its share in starts, but this is more due to the decline in social housing than a strengthening of the non-VIS market.
- There is a growing gap between financed housing units and new household formation, indicating a structural lag that could increase informal market pressure.
- Risks for 2026 include higher interest rates further cooling demand and the absence of national housing subsidy programs, particularly affecting the VIS segment.