New Housing Construction Continues to Slow

Despite an ongoing and widespread need for more housing, construction of new homes has slowed further.

Single-family permitting has fallen to its lowest level since 2023, when 30-year mortgage rates were reaching their most recent peak at more than 7.6%. Although rates are still somewhat elevated compared to the very low rates of the 2010s and into the early-2020s, they are averaging close to the levels seen in the early-2000s prior to the Great Financial Crisis.

The seasonally adjusted annual rate for single-family permitting dipped to 856,000 units in August, down 2.2% from July and 11.5% from last year. That is the fourth consecutive month below 900,000 units and 18th month below the one-million-unit mark.

Single-family starts likewise are slowing, with the seasonally adjusted annual rate (SAAR) at 890,000 units in August, down 7% for the month and 11.7% from last August. That’s only the 2nd time annual single-family starts fell below 900,000 homes since April 2023.

Meanwhile, the multifamily market is chugging ahead, with annualized permitting averaging about 440,000 units since 2015 (outside of the 2021-2023 bulge in the cycle). The August SAAR for multifamily permitting of 403,000 units was 6.7% less than July’s rate and 10.8% lower than last year’s. The SAAR for multifamily starts was down 11% from last month to match permitting at 403,000 units. However, that annualized rate was 15.8% greater than last August.

Together with the small two-to-four-unit plex product, total residential permitting was down 3.7% for the month and 11.1% for the year to 1.312 million units. The annual rate for total residential starts fell 6% from last August to 1.307 million units, and with this month’s decrease in single-family starts, August’s SAAR was down 8.5% for the month.

Single-family completions were up 5.6% from last August and 6.7% for the month at 1.090 million units. Meanwhile, multifamily completions fell 28.7% from last August to 503,000 units but were up 10.8% from last month.

The SAAR for multifamily units under construction decreased 20.2% from last August to 686,000 units, down only 1% for the month. Single-family units under construction were down 4.8% for the year and 2.1% from July to 611,000 units.

Compared to one year ago, the annual rate for multifamily permitting increased in only the West region (up 34.9% to 124,000 units). Annual permitting fell 26.4% in the South region to 165,000 units, by 18.5% in the small Northeast region to 53,000 units, and by 13.9% in the Midwest region to 62,000 units. Compared to the previous month, permitting was also down in the South, Northeast and Midwest and up in the West region.

Annualized multifamily starts almost doubled in the West region (up 93.7% to 123,000 units) and were up 35.7% in the Midwest region to 85,000 units. The Northeast region experienced a moderate increase of 8.3% to 30,000 units, while the South region saw starts decrease 14.7% to 167,000 units. Compared to July’s SAAR, starts were down in the Northeast, Midwest and South regions and were up sharply in the West region.

This post is part of a series by RealPage Senior Real Estate Economist Chuck Ehmann analyzing residential permits and starts data from the U.S. Census Bureau. For more on this data, read previous posts in the Permits series.