U.S. housing starts dipped in August, though single-family construction was up, while building permits and completions both declined, according to the U.S. Census Bureau and Department of Housing and Urban Development in its latest report on residential construction.
Privately owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,394,000, 2.7% below the revised July rate of 1,433,000 (originally reported as 1.24 million), but 3.5% up from the same time a year ago.
“New residential construction activity showed signs of current trepidation among builders, but also some optimism for the future,” noted Realtor.com® Senior Economist Joel Berner. “The current conditions facing builders—rising costs of construction materials and labor combined with slow sales forcing them to offer incentives to buyers make building homes a challenging proposition.
“Completions fell nearly across the board, a reflection of the current market conditions that are leading to sluggish new home sales,” he added. “The Northeast showed some month-over-month improvement, but that comes against a very low July baseline and it remains down year over year. The West had the largest pullback in completions and the South had its lowest pace of completions in at least a year both overall and for single family homes. Inventory growth has been slowing in recent months, so new home delivery is essential to supplying the market at large.”
Single-family authorizations in August came in at a rate of 878,000, 1.8% below the revised July figure of 894,000. Authorizations of units in buildings with five units or more were at a rate of 467,000 in August.
Privately owned housing starts in August were at a seasonally adjusted annual rate of 1,275,000, 2.6% below the revised July estimate of 1,309,000 and 1.2% below the August 2025 rate of 1,291,000. Single-family housing starts in August were at a rate of 918,000, 7.6% above the revised July figure of 853,000. The August rate for units in buildings with five units or more was 344,000.
Privately owned housing completions in August were at a seasonally adjusted annual rate of 1,128,000, 11.9% below the revised July estimate of 1,280,000 and 27.1% below the August 2025 rate of 1,548,000. Single-family housing completions in August were at a rate of 816,000, 10.4% below the revised July rate of 911,000. The August rate for units in buildings with five units or more was 302,000.
Looking ahead
Berner also felt that for builders, this month’s new construction data shows what they already know: it is a tough environment to be building homes in, with profit pressures squeezing them from both sides.
“Buyers have the opportunity to take advantage of builders cutting prices and offering incentives now, but if the number of new homes coming onto the market slows significantly, they may not have this opportunity for long,” he said.
The numbers mirror recent builder sentiment, which remains muted from economic and geopolitical uncertainty, elevated mortgage rates and rising construction costs, with the latest data and analysis from homebuilders painting an overall still-muddled picture of near-term housing demand and affordability.
“Single-family starts unexpectedly increased in August, but higher mortgage rates, rising construction financing costs and affordability challenges continue to weigh on the market and limit momentum for new-home construction,” said Bill Owens, chairman of the National Association of Home Builders (NAHB) and a homebuilder and remodeler from Worthington, Ohio.
“Year-to-date declines in single-family permits show builders remain cautious about future construction, a trend reflected in our recent builder surveys,” said Jing Fu, NAHB’s senior director of forecasting and analysis. “Ongoing economic uncertainty and affordability challenges will continue to slow single-family construction in the months ahead. However, the Midwest remains a relative bright spot, with single-family permits up 2.9% year-to-date through August.”
Cotality Chief Economist Selma Hepp projected housing starts will drop 2% in 2026 and 4% in 2027, a reversal from earlier forecasts that called for gains.
“Home builders are chugging along while facing the ‘perfect storm’ of rising costs, labor shortages due to immigration issues, and the potential crowding out of residential construction by data centers,” she said. “While builders are currently weathering these storms, margins are shrinking, and a high percentage of new home sales (80-90%) now require mortgage rate buy-downs. Housing starts forecasts have been revised downward from previously expected gains over the next several years. Housing starts are now projected to decline 2% in 2026 and 4% in 2027.”
