August 2025 New Residential Construction
What happened
New residential construction activity slowed in August, with starts and permits falling both month over month and year over year. Completions picked up compared to July, but remained well below year-ago levels. Homebuilders have exercised caution this year, facing low buyer demand, tariff uncertainty, and labor disruptions. Permits, the most forward-looking metric in the dataset, were down 3.7% from July and 11.1% from August 2024. Starts fell by 8.5% month over month and 6% year over year, with a drop in both single-family and multifamily starts. Completions grew by 8.4% from July but trail August 2024 by 8.4%.This month’s data highlights the persistent challenges facing builders. Still, recent research shows that many builders are working to boost affordability and attract buyers through incentives such as mortgage rate buydowns. Builder sentiment has steadied in recent months near recent lows, underscoring the difficult market conditions shared by buyers, sellers, and builders alike.
Where it happened
The permitting slowdown affected both single-family and multifamily projects. One-unit home permits fell 2.2% from July, reaching 856,000 units, 11.5% lower than the prior year. For 2-to-4-unit homes, permits fell 3.6% from July and 7% annually. The 5-plus-unit permits followed suit, dropping 6.7% monthly and 10.8% annually. Only the West saw a monthly pickup in permitting, with a 9.5% rebound, led by multifamily permits. All four regions saw permits fall annually, ranging from a 3.8% annual drop in the West to a 15% drop in the South.
Single-family housing starts contracted on a month-over-month and year-over-year basis, while multifamily starts showed some strength annually, despite a monthly decline. Single-family starts dropped 7% from July and 11.7% compared to August 2024, dropping below 900,000 units. Multifamily starts fell 11% month over month but were up 15.8% year over year. Nationwide asking rents have been falling for more than two years, but a pullback in multifamily construction, met with climbing vacancy rates, could put upward pressure on rents once again in the absence of additional supply. Starts were strongest in the West, picking up 30.4% month over month, led by multifamily. Notably, single-family starts picked up monthly in all regions except the South, where ample home supply has resulted in more buyer-friendly conditions.
Completions were a bright spot in August, picking up 8.4% month over month, though still 8.4% below year-ago levels. Single-family completions were especially strong, picking up 6.7% month over month and 5.6% year over year. Multifamily completions picked up 10.8% from July, but remained 28.7% below year-ago levels. The Midwest saw completions climb 24.7% month over month and 41.1% year over year in August, the strongest growth of any region.
What does this mean for homebuyers, sellers, homeowners, and the housing market
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.
