Zillow Analysis: New Home Construction Slowing

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Zillow, Seattle, released an analysis finding that residential building permits are running a record 19.4% below the pre-pandemic trend line.

Over the 12 months ending July 2026, more than 1.42 million residential building permits were issued nationwide, down 1.7% from the same period last year. Permitting has fallen year-over-year for 44 straight months.

Completion of detached single-family homes fell for the third straight year in 2025, down 2.5% to 817,000. That’s the lowest total since 2020–but does remain 4.4% above 2019.

“Builders are responding to a softer market by pulling back, especially in the places they’d been building the most,” said Kara Ng, senior economist at Zillow. “That’s an understandable reaction to today’s conditions, but the housing shortage that drove the building boom is still very much intact. The concern is that when conditions improve and buyers return, the thinner pipeline could mean a tighter market that drives up prices.”

There are some spots of better news, the analysis notes. Builders are completing homes more quickly. The median detached home completed last year took six months to build, a month faster than in 2022 and 2023.

And, builders are making smaller homes that tend to be more affordable. The median newly completed detached home measured 2,300 square feet last year, down from 2,400 in 2019.

By area, permitting is slowing the most in markets that really boomed during the pandemic, like Austin, Texas, down 25.3% over the past year, and San Antonio, down 24.1% in the past year.

Gains in permitting are happening on the coasts and across the Midwest. Permits in San Jose, Calif., have increased 122% year-over-year, followed by Seattle, up 35.8%, Birmingham, Ala., up 32.9%, Los Angeles, up 30.6%, and San Francisco, up 29%. However, the analysis cautions that years of lagging construction mean even a small uptick produces notable numbers.