Chart of the Week: New Residential Construction

Source: US Census Bureau

New residential construction is slowing, with elevated inventory of newly built homes for sale keeping builders from adding much more to their pipelines, while rising mortgage rates and ongoing economic uncertainty are reducing demand from potential homebuyers. Additionally, lower projections for U.S. population growth due to more deaths than births and lower immigration, coupled with cooling house prices as a market signal, imply a smaller housing shortage than recently estimated (MBA’s white paper on the topic can be found here).

According to the Census Bureau, housing starts in August 2026 totaled 1.275 million, down 3 percent from a month ago and 1 percent behind last year’s pace. Single-family starts rose to 918,000 units from 848,000 units in July, while permits fell to 878,000 units from 894,000 units. Permitting has stayed in the range of 890,000 units throughout 2026 thus far. Multifamily starts dropped to 357,000 units from 456,000 units, the second consecutive monthly decline, after reaching a 2026 high of 537,000 in June.

In MBA’s September forecast, we estimate single-family housing starts at a seasonally adjusted annualized pace of roughly 900,000 units for 2026 and 2027, down from 2025’s total of 940,000 units. Despite the August rebound in single-family starts, permitting remained stable, and with slowing purchase applications and declining buyer traffic as reported in the NAHB’s builder sentiment survey, we expect housing starts to remain relatively flat. Multifamily starts are forecast to be around 441,000 units in 2026, then declining to the 350,000 to 370,000 unit range over the next two years. After a high level of multifamily properties built in recent years, along with declining market rents in many states, we expect slower new construction activity.