Home Building Activity Falters in August

Amid faltering buyer demand, ongoing labor shortages, and elevated construction costs, home builders have taken a more cautious approach to residential construction this year. In August, residential construction activity slowed as both housing starts and permits declined compared with the previous month and compared with the same period last year. Meanwhile, completions increased from July but were lower than last year’s figure, according to data from housing marketing platform Realtor.com.

In August, housing starts dropped by 8.5% from July and 6% from the same period last year, with decreases across both single-family and multifamily projects. Likewise, building permits fell by 3.7% month-over-month and 11.1% year-over-year. Completions rose by 8.4% from July but were still 8.4% lower than a year earlier.

The permitting slowdown affected both single-family and multifamily projects. 1-unit home permits fell 2.2% from July, reaching 856,000 units, 11.5% lower than one year prior. 2-to-4-unit permits fell 3.6% from July and dropped 7.0% annually. 5+ unit permits followed suit, dropping 6.7% monthly and 10.8% annually. Only the West saw a monthly pick-up in permitting, with a 9.5% rebound, led by multi-family permits. All four regions saw permits fall annually, ranging from a 3.8% annual drop in the West to a 15.0% drop in the South.

Single-family housing starts contracted on a month-over-month and year-over-year basis, while multi-family starts showed some strength annually, despite a monthly decline. Single-family starts dropped 7.0% from July and 11.7% compared to August 2024, dropping below 900,000 units. Multi-family starts fell 11.0% month-over-month but were up 15.8% year-over-year.