US Homebuilders Start Construction on New Homes at Quickest Pace in Five Months

Despite ongoing housing recession, new home construction rose more than 5% in July to an annualized rate of 1.4 million homes, according to the government. Multifamily housing starts led the gain, with a 10% increase in one month alone. However, building permits, a leading indicator of future construction activity, fell almost 3% in July to an annualized rate of 1.35 million, roughly 6% below the pace seen in the same period a year ago.

Key Takeaways:

New residential construction rose 5% in July to an annualized rate of 1.4 million homes, with multifamily housing starts leading the gain at 10% over the previous month.
Single-family homes, which make up the lion's share of construction, rose roughly 2% in July.
Building permits, a leading indicator of future construction activity, fell almost 3% in July to an annualized rate of 1.35 million, 6% below the pace seen in the same period a year ago.
The housing sector has been in recession since the Federal Reserve started raising rates in 2022, and experts expect residential investment to drag on GDP growth.
Two factors weighing on the housing sector are rising materials costs due to tariffs and a crackdown on immigration that is shrinking the sector's labor pool.
LPL Financial chief economist, Jeffrey Roach, expects residential investment to reverse in Q1 2026, but for now, the housing sector is expected to continue weighing on broader economic growth.

Statistics:

New residential construction: 1.4 million homes (annualized rate) in July, up 5% from the previous month.
Multifamily housing starts: 10% increase over the previous month.
Single-family home construction: roughly 2% increase in July.
Building permits: almost 3% fall in July to an annualized rate of 1.35 million, 6% below the pace seen in the same period a year ago.

Sources:

Axios: https://www.axios.com/2025/06/18/homebuilding-slump-pm
US Census Bureau: https://www.census.gov/construction/nrc/pdf/newresconst.pdf