After a Strong 2024, Home Building Activity Falters in First Half of 2025

Following a strong year of growth in 2024, single-family permitting fell in the first half of 2025. According to a recent report from home marketing platform Zillow, single-family building permits declined by 6.3% in the first six months of 2025. This decrease is a stark contrast from the end of 2024, when building permits were up by 6.6%.

Why fewer building permits?

Home building activity had a strong rebound in 2024 after two straight years of decline. This shift was largely driven by strong homebuyer demand amid a 4.7 million-unit housing deficit and a lack of available resale inventory.

But the dynamic reversed in the first half of 2025. Why? The inventory of resale homes on the market has now reached a six-year high, exceeding pre-pandemic levels in many areas and causing builders to increase incentives and reduce prices to sell new homes.

Where is Permitting Activity Falling the Most?

Among the largest 50 U.S. metros, Jacksonville, Fla., San Antonio, Boston, Denver, and St. Louis have seen the largest pullback in total single-family permits issued in the first six months of the year compared with the same period in 2024.

Other markets, however, are continuing to gain traction. Of the largest 50 metros, Kansas City, Orlando, Fla., Cincinnati, Pittsburgh, and Oklahoma City have seen the largest increase in total single-family permits issued in the first six months of the year, compared with the same period last year.

Zoning changes could help grow new-home inventory

One major factor impacting where and how much housing home builders can produce is zoning regulations. According to Zillow, a number of structural reforms are needed to help boost new-home production and inventory, including zoning reforms for higher density, implementing more relaxed parking mandates, and streamlining permitting approvals to bring new homes to market faster.

Updated zoning regulations could help boost new housing, but buyer activity remains weak

• Unsold New-Home Inventory Hits a High: Unsold new-construction inventory reached a 15-year high in February 2025 due to a lack of buyer interest. 
• New-Home Sales Fall in May: In May, new-home sales fell by 6.3% year-over-year, and 13.7% on a month-over-month basis.