Housing starts recede in July amid market headwinds

Washington, D.C.—Housing starts fell sharply in July as builders continued to contend with economic uncertainty, rising construction costs, labor shortages and elevated financing expenses, according to the National Association of Home Builders (NAHB).

Overall housing starts dropped 12.4% to a seasonally adjusted annual rate of 1.24 million units, according to the U.S. Department of Housing and Urban Development and U.S. Census Bureau.

The annualized rate represents the number of housing units builders would start over the next 12 months if construction continued at the July pace.

Single-family starts fell 9.9% to an annual rate of 808,000 units. Single-family construction was also down 15.7% from July 2025.

The multifamily sector, which includes apartment buildings and condominiums, declined 16.8% to an annual rate of 431,000 units. Multifamily starts were down 8.9% from a year earlier.

“Builders continue to face significant challenges from elevated construction costs and affordability pressures,” said Bill Owens, chairman of NAHB and a home builder and remodeler from Worthington, Ohio. “Higher mortgage rates are keeping many prospective buyers on the sidelines, while rising material, gas and diesel costs are adding to the cost of construction. These challenges are making it increasingly difficult for builders to deliver homes at prices that buyers can afford.”

NAHB also pointed to broader weakness in the housing market as builders navigate softer demand.

On a regional, year-to-date basis, combined single-family and multifamily starts increased 11.7% in the Northeast. Meanwhile, starts declined 4.5% in the Midwest, 3% in the South and 3.8% in the West.

“The July decline in housing starts reflects broader weakness in the housing market,” said Danushka Nanayakkara-Skillington, NAHB assistant vice president for forecasting and analysis. “Builders remain cautious as elevated mortgage rates, rising construction costs and economic uncertainty continue to limit demand. The drop in single-family construction is especially concerning given the persistent housing shortage in many markets. Looking ahead, permits are trending positively for both single-family and multifamily construction.”

Permits move higher

Despite the decline in housing starts, permitting activity improved in July. Overall permits increased 5% to a seasonally adjusted annual rate of 1.44 million units. Single-family permits rose 2.5% to an annual rate of 894,000 units, a 1.1% increase from July 2025.

Multifamily permits, by comparison, increased 9.4% to an annual rate of 549,000 units, up 6.4% from a year earlier.

Regional permit activity also showed mostly positive results on a year-to-date basis. Permits increased 14.3% in the Northeast, 2.6% in the Midwest and 2.1% in the West. However, the South recorded a 4.7% decline.

Builders currently have 579,000 single-family homes under construction. The number of apartments under construction stands at 683,000 units.

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