August 23, 2025
Construction activity on new single-family homes got an unexpected boost in July, powered by a building surge in the South.
Single-family housing starts rose 2.8% last month from June to a seasonally adjusted annual rate of 939,000, the U.S. Census Bureau and Department of Housing and Urban Development reported Tuesday. The July figure was up 7.8% from a year earlier.
The gain was fueled entirely by the South, where single-family starts rose 13% on the month and 22% annually. Single-family starts fell on a monthly and annual basis in the Midwest, Northeast, and West.
Permits for single-family homes, a sign of future construction, rose 0.5% on the month nationally but fell 7.9% on an annual basis.
Despite the modest gain last month, the pipeline for single-family home construction remains sluggish, with a total of 621,000 homes currently under construction, down 1% in July and 3.7% lower than a year ago.
“All things considered, this month’s new construction data does not provide many clear signals as to where homebuilding is heading,” says Realtor.com Senior Economist Joel Berner. “We know that new home sales have been quite slow this summer and that tariffs are adding complication and expense to building activity, but builders do not appear to be backing down much more than they already have.”
Recent survey data shows that homebuilders remain pessimistic about the state of the housing market, with the use of sales incentives hitting a five-year high.
In August, 66% of builders reported using sales incentives such as discounts or mortgage rate buydowns, up from 62% in July, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released Monday.
The survey showed that 37% of builders reported cutting prices in August—little changed from 38% in July. The average price reduction was 5% this month, where it has held steady since November.
Overall builder confidence in the market for newly built single-family homes was 32 in August, down 1 point from July. Anything below 50 reflects negative homebuilder sentiment about the market.
“Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs,” says NAHB Chairman Buddy Hughes. “These headwinds were reflected in our latest builder survey, which indicates that affordability is the top challenge to the housing market.”
Meanwhile, the July construction data showed that multifamily starts, which tend to be more volatile, also surged last month, rising 9.8% from June to a seasonally adjusted annual rate of 489,000. That figure was up 24% from the same month last year.
Multifamily construction, which fell to a 10-year low last year, has rebounded in 2025, powered in part by affordability challenges in the single-family market that have kept young families renting for much longer than they typically used to.
Combining single-family and multifamily, overall housing starts increased 5.2% monthly in July to a seasonally adjusted annual rate of 1.43 million units. Overall, permits fell 2.8% monthly to 1.35 million annualized.
On a regional and year-to-date basis, combined single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South, and 0.5% lower in the West.
