The latest report on new residential construction from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau found construction lagging in the month of August.
Privately-owned housing starts were at an annualized rate of 1,307,000, down by 8.5% from the revised July 2025 figure (1,429,000) and 6% down from August 2024 (1,391,000). Single-family housing starts came in at 890,000 in August, down 7% from the revised July figure of 957,000—this is the lowest level of single-family housing starts in over a year, since July 2024.
Lisa Sturtevant, chief economist of Bright MLS, noted in a press release that this slowdown in homebuilding activity could be a portent for broader (and worrying) economic shifts.
“A pullback in residential building activity has historically preceded an economic recession,” said Sturtevant. “Residential real estate is a key component of the U.S. economy, accounting for about 15% – 18% of Gross Domestic Product. When home building slows, it has a ripple effect across the economy. Declining new construction also reflects less consumer demand and indicates that overall consumer spending could be waning.”
In previous summer months this year, while housing inventory was reported to be up, new-home sales saw declines. On the other hand, sales of existing homes were reported to pick up (slightly).
“Homebuilders have exercised caution this year, facing low buyer demand, tariff uncertainty and labor disruptions,” observed Realtor.com® Senior Economic Research Analyst Hannah Jones in a statement. “All things considered, this month’s new construction data points to a market that is still under strain. August’s release shows that builders are pulling back on future projects even as they push to complete existing ones. Supply will likely tighten further down the road, unless demand conditions improve and permit activity stabilizes.”
Jones described improvements in housing completions as a bright spot of the report. In August, privately-owned housing completions came in at a seasonally adjusted annual rate of 1,608,000, up 8.4% compared to July’s 1,483,000 (but down by 8.4% year-over-year from August 2024’s 1,755,000). Single-family completions specifically reached 1,090,000 in August, up 6.7% from the July rate.
Conversely, building permits (which are a sign of intent to build) came in at 1,312,000 in August, down by 3.7% from July (1,362,000) and down 11.1% year-over-year (August 2024 building permits were 1,476,000).
“Housing affordability is hurting buyer traffic for builders, and as a result, builders have slowed single-family home construction,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB), in a statement. “Nonetheless, our latest survey shows builders reported an increase for future market expectations as mortgage rates have posted a modest decline in recent weeks.”
Robert Dietz, chief economist of the NAHB, noted in a statement that the Federal Reserve’s expected interest rate cut later today could give the construction sector a boost.
“This return to monetary policy easing will help the mortgage market indirectly and lead to lower interest rates for building and land development loans, which will help builders to boost housing production,” said Dietz.
Sturtevant, though, said that a rate cut could help the housing market, but other economic factors are at play.
“Lower rates can help the homebuilding industry by lowering borrowing costs,” explained Sturtevant. “However, there are other important headwinds, including inflation, tariffs and slower demand, that will likely lead to continued sluggish housing construction through the end of the year.”
Regional breakdown
In the Northeast during August, seasonally adjusted housing starts rose 9.2% month-over-month, but declined 11.6% year-over-year for a total of 107,000. Single-family starts in the Northeast during August numbered 74,000, up 42.3% month-over-month but down 12.9% year-over-year.
In the Midwest, total starts posted a 10.9% month-over-month decline and a 5.3% year-over-year rise; total starts fell from 247,000 to 220,000 (where they were in both July and August 2024), while single-family starts rose 8.2% monthly to 132,000, but fell by 4.3% annually.
Southern housing starts declined by 21% month-over-month and by 13% annually to 667,000. Single-family housing starts in the South during August were 497,000, down 17% monthly and 11.7% annually.
Western housing starts came in at 313,000—a 30.4% increase monthly and a 6.5% increase annually. Single-family housing starts in the West were 187,000, up 1.6% monthly and down 15.8% annually.
For the full housing starts report, click here.
