NEW YORK, August 19, 2026– New residential construction in the United States tumbled sharply in July, with housing starts falling 12.4% from June to a seasonally adjusted annual rate of 1.239 million units, according to the official data released jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). The decline was far steeper than economists had anticipated, with consensus forecasts pointing to a more modest pullback to roughly 1.35 million units.
July’s drop came on the heels of an unusually strong June, when starts had surged 19.7% to a revised annualized rate of 1.415 million. The whipsaw between the two months underscores how volatile the housing sector has become as builders navigate elevated borrowing costs, soft buyer demand, and swings in multifamily construction activity.
The pullback has been widespread, but the downturn in starts of multi-unit structures, such as apartments, condominiums, and other buildings with five or more units, has been particularly pronounced. Starts of multi-unit structures fell by 15.6% in July compared to June. Construction of single-family homes, which represents the majority of the market, has also fallen sharply, down by 9.9% from June’s rate.
In recent months, starts of multifamily units have been rather volatile, swinging between large gains and losses as construction companies adjust to higher financing costs and shifts in rental demand. By contrast, starts of single-family units have followed a consistent decline in recent months, a pattern largely attributed to the continued effect of higher mortgage rates that keep potential buyers away, a trend monitored in national economic metrics published by the Federal Reserve Bank of St. Louis (FRED).
The regional breakdown revealed sharp divergence across the country. Construction activity fell hardest in the Midwest, where starts plunged 27.6% to an annualized 173,000 units. The South, the largest region for homebuilding, saw a 12.6% decline to 645,000 units, while the West dropped 13.8% to 149,000 units.
The only positive note came from the Northeast, which saw its starts increase by 17.1% to 164,000 units, although the Northeast is still the least important contributor to national housing starts. Official regional breakdowns and statistical releases can be reviewed via U.S. Census Bureau Construction Statistics.
July’s figure was not far off the six-year low of 1.182 million units set two months earlier, adding to worries about the continuing troubles facing the housing industry despite the strength elsewhere in the economy.
Even as the construction sector was showing signs of weakening, another, carefully watched indicator was sending a more positive message. The number of building permits, regarded as an indicator of future construction activity, jumped by 5% to reach a seasonally adjusted annual rate of 1.443 million in July, comfortably topping expectations of around 1.37 million. The previous month’s figure for permits was revised lower to a decline of 2.6% from the prior month.
The difference between declining starts and increasing permits indicates that developers may be reducing their activity at present but have not forgotten to file for permits in order to build later this year, a situation that may suggest further construction activity in the months to come.
As such, collectively, the report for July seems to indicate a housing market that is in a state of contradiction, as it is faced with the challenges of the short term, but hopes for better times in the long run. The high mortgage rates and the cautiousness of the builders’ sentiment are having their effects on the housing market, especially for single-family homes, but there are some indications from the permits report that the builders have not given up yet on future projects.
Data & Methodology Note
The figures cited in this article are derived from the New Residential Construction report published jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). Monthly figures are seasonally adjusted at annual rates (SAAR) to account for seasonal variations, holiday effects, and trading day differences. Percentage changes are calculated based on unrounded estimates. Revisions to prior months’ data reflect updated survey responses and late-filed permits.
