Housing construction slowed again in August

September 17, 2025

New housing construction, also known as housing starts, plunged 8.5% in August to the lowest level since May. Both single and multifamily starts contributed to the declines. Compared to a year ago, starts have fallen 6%; the Midwest and the South regions both posted declines.

Even single-family starts dropped 7% to 890,000 units, the lowest level in more than a year. At the peak of the recent housing cycle, starts did not rise above one million units, indicating the hurdles that builders face in ramping up construction. Another factor, mortgage rates, remained above 6.5% in August, keeping many potential buyers on the sidelines for longer.

Multifamily starts fell 11% but the monthly data tend to be noisy. On a three-month-moving average basis, starts increased 8.8%. After a significant decline in starts due to record levels of backlogs in apartments near completion, builders are returning to building multifamily, albeit slowly.

Building permits, which signal future construction activity, dipped 3.7% in August. Single-family permits, at 856,000, hit the lowest level since March 2023. Builders express pessimism about near-term prospects for housing demand due to still-high interest rates and deteriorating consumer sentiment and balance sheets. Builder sentiment, as measured by the National Association of Home Builders, has been in negative territory for almost a year and a half.