New-home construction fell more than expected in August, as single-family starts hit their lowest level since July 2024, and single-family permits fell to their lowest point since March 2023. 

Overall new-home construction, which includes single-family homes as well as apartments and condominiums, fell 8.5% month over month to a seasonally adjusted annual rate of 1,307,000 units in August, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported. Year over year, the rate was down 6%. 

Analysts were expecting starts to come in at an annual rate of 1,375,000.  

Single-family starts fell 7% month over month and 11.7% year over year to 890,000, while multifamily starts fell 11% month over month and jumped 15.8% year over year to 403,000. 

“Single-family construction is trending lower as builders work to balance elevated inventories with softer demand, pressured by affordability challenges and improved re-sale supply,” First American Deputy Chief Economist Odeta Kushi said. “Meanwhile, single-family permits continue to signal pressure on building activity.” 

Permits for single-family homes were down 2.2% compared to July and 11.5% compared to August 2024. Single-family housing completions, however, were up, rising 6.7% month over month and 5.6% year over year to 1,090,000. 

“This downturn aligns with persistent weakness in builder sentiment, which has remained in negative territory for 17 consecutive months, recently stabilizing, but still at subdued levels,” Kushi said. “Builder sentiment held steady at 32 in September, reflecting ongoing pressure from elevated construction costs, affordability challenges and economic uncertainty.”