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In Research & Trends

Single-Family Starts Edge Higher but Affordability Challenges Persist

August 19, 2025 No Comments

Single-family housing starts posted a modest gain in July as builders continue to contend with challenging housing affordability conditions and a host of supply-side headwinds, including labor shortages, elevated construction costs and inefficient regulatory costs.

Led by solid multifamily production, overall housing starts increased 5.2% in July to a seasonally adjusted annual rate of 1.43 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The July reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.8% to a 939,000 seasonally adjusted annual rate and are down 4.2% on a year-to-date basis. The multifamily sector, which includes apartment buildings and condos, increased 9.9% to an annualized 489,000 pace.

The slowdown in single-family home building has narrowed the home building pipeline. There are currently 621,000 single-family homes under construction, down 1% in July and 3.7% lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply.

On a regional and year-to-date basis, combined single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South and 0.5% lower in the West.

Overall permits decreased 2.8% to a 1.35-million-unit annualized rate in July. Single-family permits increased 0.5% to an 870,000-unit rate and are down 5.8% on a year-to-date basis. Multifamily permits decreased 8.2% to a 484,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.6% lower in the Northeast, 9.1% higher in the Midwest, 3.4% lower in the South and 5.1% lower in the West.

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In Research & Trends

June Single-Family Permits Slumps, Multifamily Gains

August 15, 2025 No Comments

Single-family housing permits continued a downhill trend for the sixth month in a row. The continuous decline in single-family permits highlights persistently weak housing demand, tied to affordability challenges like high mortgage rates. Builders appear cautious amid economic uncertainty, labor constraints, and rising inventories. The uptick in multi-family permits suggests a potentially stabilizing trend, though it’s important to note its volatility. The housing market’s mixed signals—weak single-family coupled with some resilience in multi-family—could mean continued drag on residential investment and the broader economy this year.

Over the first six months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 485,935. On a year-over-year (YoY) basis, this is a decline of 5.6% over the June 2024 level of 514,728. For multifamily, the total number of permits issued nationwide reached 244,812. This is 2.9% higher compared to the June 2024 level of 237,935.

Year-to-date ending in June, single-family permits were up in one out of the four regions. The Midwest posted a small increase of 1.8%. The Northeast was 1.7% lower, the South was down by 6.5%, and the West was down by 8.1% in single-family permits during this time. For multifamily permits, three out of the four regions posted increases. The Midwest was up by 22.4%, the West was up by 8.0%, and the South was up by 7.1%, Meanwhile, the Northeast declined steeply by 30.0%, driven by the New York-Newark-Jersey City, NY-NJ MSA which declined by 40.0%.

Between June 2025 YTD and June 2024 YTD, 15 states posted an increase in single-family permits. The range of increases spanned 19.9% in Hawaii to 0.2% in Kentucky. The remaining 35 states and the District of Columbia reported declines in single-family permits with the District of Columbia reporting the steepest decline of 24.2%.

The ten states issuing the highest number of single-family permits combined accounted for 63.0% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 78,104 permits over the first six months of 2025; this is a decline of 8.0% compared to the same period last year. The second highest state, Florida, decreased by 10.6%, while the third highest, North Carolina, posted a decline of 0.9%.

Between June 2025 YTD and June 2024 YTD, 29 states recorded growth in multifamily permits, while 21 states and the District of Columbia recorded a decline. Iowa (+165.5%) led the way with a sharp rise in multifamily permits from 1,178 to 3,128, while Alabama had the largest decline of 49.6% from 1,788 to 901.

The ten states issuing the highest number of multifamily permits combined accounted for 61.8% of the multifamily permits issued. Over the first six months of 2025, Florida, the state with the highest number of multifamily permits issued, experienced an increase of 25.0%. Texas, the second-highest state in multifamily permits, saw an increase of 14.1%. California, the third largest multifamily issuing state, increased by 11.5%.

At the local level, below are the top ten metro areas that issued the highest number of single-family permits.

For multifamily permits, below are the top ten local areas that issued the highest number of permits.

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In Research & Trends

Market Share for Modular and Other Non-Site Built Housing in 2024

August 11, 2025 No Comments

The total market share of non-site built single-family homes (modular and panelized) was just 3% of single-family homes in 2024, according to completion data from the Census Bureau Survey of Construction data and NAHB analysis. This is the same as the 3% share in 2023. This share has been steadily declining since the early-2000s despite the high-level of interest for non-site built construction. This low market share in fact runs counter to some media commentary on off-site construction suggesting recent gains. Nonetheless, there exists potential for market share gains in the years ahead due to the need to increase productivity in the residential construction sector.

In 2024, there were 28,000 total single-family units built using modular (13,000) and panelized/pre-cut (15,000) construction methods, out of a total of 1,019,000 single-family homes completed. It is worth noting that the Census definitions of off-site construction are relatively narrow. In a separate survey, the Home Innovation Research Labs Survey of U.S. Home Builders has a higher share for panelized construction (5-12%) due to a wider definition of “panelized” construction.

While the Census-measured market share is small, there exists potential for expansion. This 3% market share for 2024 represents a decline from years prior to the Great Recession. In 1998, 7% of single-family completions were modular (4%) or panelized (3%). This marked the largest share for the 1992-2024 period.

One notable regional concentration is found in the Midwest and the Northeast. These two regions have the highest market share of homes built using non-site build methods. In the Midwest, 7% (8,000 homes) of the region’s 136,000 housing units were completed using these methods. In the Northeast, 5% (3,000 homes) of the region’s 66,000 housing units were completed using non-site build methods. However, numerically, the South continues to be the biggest market for this type of construction where 13,000 homes were built using non-site build methods.

With respect to multifamily construction, approximately 3% of multifamily buildings (properties, not units) were built using modular and panelized methods. This is significantly lower than the 7% share in 2023 but on par with the average for the last 5 years. It is notable that modular construction method accounted for 2% of this share. In previous years it was only panelized construction methods that made up the higher share of non-site build methods in multifamily construction. Prior to last year, the highest levels of modular and panelized methods share in multifamily construction was in 2000 and 2011, where 5% of multifamily buildings were constructed with modular (1%) or panelized construction methods (4%).

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In Research & Trends

Foundation Types in 2024: Slabs Continue to Rise, Crawl Spaces Decline

August 8, 2025 No Comments

In 2024, 73% of new single-family homes started were built on slab foundations, according to NAHB analysis of the U.S. Census Bureau’s Survey of Construction (SOC). Although this was a modest year-over-year increase of 0.6 percentage points, it continues the upward trend in slab adoption, widening the gap between slabs and other foundation types. In comparison, basements (full or partial) accounted for 17% of new homes, while crawl spaces made up just 9.2%.

Foundation type continues to follow regional climate patterns. In colder northern divisions, where foundations to extend below the frost line, basements are more common. In 2024, the majority of homes in New England (67.2%), West North Central (62.3%), East North Central (50.3%), and the Middle Atlantic (48.8%) were built with full or partial basements. Among these, East North Central (1,119 sq. ft.) and the Middle Atlantic (1,113 sq. ft.) had the largest average finished basement areas, both exceeding the national average of 1,112 sq. ft. West North Central followed with 940 sq. ft., and New England averaged 810 sq. ft.

In contrast, warmer regions favor slab foundations for their affordability and efficiency. Nearly all new single-family homes in West South Central (97.9%), Pacific (89.9%), and South Atlantic (85.7%) divisions were built on slabs in 2024. The cost advantages of slabs have also led to increased adoption in some northern divisions – especially post-pandemic, as rising material costs and supply chain disruptions pushed builders to prioritize cost-effective construction methods.

Crawl space foundations have seen a long-term decline. While East South Central and Pacific divisions have historically led in crawl space usage, both have experienced noticeable decreases, particularly the Pacific, which saw a sharp drop in the past decade. Interestingly, the Mountain division has seen a gradual rebound in crawl space use, now ranking second in crawl space share. Meanwhile, divisions such as East North Central, New England, and West South Central have consistently maintained shares of new homes started below 10%, reflecting persistent regional preferences. Notably, the West North Central division surpassed the 10% threshold in 2024 after several years of incremental growth, although it remains unclear whether this marks a lasting shift or a one-time fluctuation.

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In Research & Trends

June Private Residential Construction Spending Dips

August 1, 2025 No Comments

Private residential construction spending fell by 0.7% in June, marking the sixth straight month of decreases. This decline was primarily driven by reduced spending on single-family construction. Compared to a year ago, total spending was down 6.2%, as the housing sector continues to navigate the economic uncertainty stemming from ongoing tariff concerns and elevated mortgage rates.

According to the latest U.S. Census Construction Spending data, single-family construction spending declined by 1.8% in June. This decrease aligns with the weak single-family starts in June and the third lowest reading of NAHB/Wells Fargo Housing Market Index (HMI) since 2012. Compared to a year ago, single-family construction spending decreased by 5.3%. Meanwhile, multifamily construction spending stayed flat for the month but continued to follow the downward trend that began in mid-2023. Compared to June 2024, multifamily spending was down 9.5%. Improvement spending (remodeling) was up 0.5% in June but was 6.1% lower on a year-over-year basis.

The NAHB construction spending index is shown in the graph below. The index illustrates how spending on single-family construction has slowed since early 2024 under the pressure of elevated interest rates and concerns over building material tariffs. Multifamily construction spending growth has also slowed down after the peak in July 2023. Additionally, improvement spending has been weakening since the beginning of 2025.

Meanwhile, spending on private nonresidential construction was down 4% over a year ago. The annual private nonresidential spending decrease was primarily driven by a $14.7 billion drop in the manufacturing category, followed by a $13.7 billion decrease in commercial construction spending.

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In Research & Trends

Use of Private Water and Sewer Systems in New Single-Family Homes

July 21, 2025 No Comments

The share of new single-family homes built with individual septic systems declined slightly in 2024 compared to the previous year, while the share of homes served by private wells remained steady. According to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC), approximately 16% relied on individual septic systems, and 9% of new single-family homes started in 2024 were served by private wells.

Nationally, the majority of new homes were connected to public water systems – including community or shared supplies/wells – while 9% were built with private wells. This national share held steady from the previous year, though regional differences were notable. In New England, where median lot sizes are more than three times the national average, 37% of new single-family homes relied on private wells, making it the division with the highest rate in the nation. The East North Central division followed with 27%, while the Middle Atlantic stood at 13%. The South Atlantic region also exceeded the national average, with 11% of new homes using private wells. In stark contrast, private wells were uncommon in the East South Central and West South Central divisions, each accounting for just 1% of new homes started.

For sewage disposal, 84% of new single-family homes in 2024 were connected to public sewer systems, which include community or shared sewage/septic systems. The remaining 16% utilized individual septic systems, down slightly from 17% in the previous year. As with water sources, the usage of septic systems varied significantly by region.

New England led the nation with 49% of new homes using individual septic systems. The East North Central (28%), East South Central (25%), and South Atlantic (22%) divisions also reported shares above the national average. In contrast, lower usage was recorded in the Mountain (9%) and West North Central (8%) divisions, while the Pacific and West South Central divisions had the smallest shares, at 7% and 5%, respectively.

Compared to 2023, seven of the nine Census divisions experienced a decline in the use of individual septic systems with five of the divisions falling below the national average. New England and East North Central were the exceptions, recording increases of 11- and 5-percentage points, respectively, bringing their shares to 49% and 28% in 2024. However, these gains are not anomalies. In New England, the share had dipped to 38% in 2023, down from 46% in 2022. Similarly, East North Central’s share decreased from 27% in 2022 to 23% in 2023.

Zooming out, the share of new homes built with individual septic systems has generally been on a decline across most regions since 2010. This trend has been slightly more pronounced in the three divisions (New England, East South Central and East North Central) with historically higher usage. The South Atlantic division stands out as an exception. While its share ranged from 13% to 17% in the early 2010s, it has steadily increased in recent years, and now exceeds 20%.

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In Research & Trends

Single-Family Starts Weaken in June as Affordability Challenges Persist

July 18, 2025 No Comments

Single-family housing starts declined in June to the lowest rate since July 2024 as elevated interest rates, rising inventories and ongoing supply-side issues continue to act as headwinds for the housing sector.

Due to a solid increase in multifamily production, overall housing starts increased 4.6% in June to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The June reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.6% to an 883,000 seasonally adjusted annual rate and are down 10% compared to June 2024. The multifamily sector, which includes apartment buildings and condos, increased 30% to an annualized 438,000 pace.

Single-family building conditions continued to weaken in June as housing affordability challenges caused builder traffic to move lower as buyers moved to the sidelines. Rising levels of resale inventory are also a headwind for the industry.

Single-family home building in the South is down 12.4% on a year-to-date basis, far outpacing declines in the Northeast and the West. However, single-family home building is up 10% on a year-to-date basis in the Midwest, where housing affordability conditions are generally better than much of the nation.

On a regional and year-to-date basis, combined single-family and multifamily starts were 28.8% higher in the Northeast, 13.1% higher in the Midwest, 8.1% lower in the South and 0.6% lower in the West.

Overall permits increased 0.2% to a 1.40-million-unit annualized rate in June. Single-family permits decreased 3.7% to an 866,000-unit rate and are down 8.4% compared to June 2024. Multifamily permits increased 7.3% to a 531,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.9% lower in the Northeast, 8.2% higher in the Midwest, 3.3% lower in the South and 3.7% lower in the West.

The declines for single-family home building have caused the number of single-family homes under construction to level off. There are currently 622,000 single-family homes under construction, which is 6% lower than a year ago. The number of apartments under construction in June, 739,000, is 18.8% lower than a year ago.

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In Research & Trends

Permits Fall in May 2025

July 16, 2025 No Comments

Housing permits continued a downhill trend for the fifth month in a row, pointing to a broader residential construction slowdown for 2025. This slowdown is attributed to factors like higher mortgage rates, tariff concerns, and challenges about future housing demand due to economic uncertainty.

Over the first five months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 404,977. On a year-over-year (YoY) basis, this is a decline of 6.1% over the May 2024 level of 431,196. For multifamily, the total number of permits issued nationwide reached 195,561. This is essentially unchanged from the May 2024 level of 195,932.

Year-to-date ending in May, single-family permits were up in two out of the four regions. The Midwest and the Northeast posted small increases of 0.9% and 0.7% respectively. The South was down by 7.6% and the West was down by 7.4% in single-family permits during this time. For multifamily permits, three out of the four regions posted increases. The Midwest was up by 20.0%, the West was up by 5.2%, and the South was up by 3.5%, Meanwhile, the Northeast declined steeply by 31.2%, driven by the New York-Newark-Jersey City, NY-NJ MSA which declined by 42.0%.

Between May 2025 YTD and May 2024 YTD, 16 states posted an increase in single-family permits. The range of increases spanned 26.2% in Hawaii to 0.4% in Pennsylvania. The remaining 34 states and the District of Columbia reported declines in single-family permits with New Mexico reporting the steepest decline of 24.5%.

The ten states issuing the highest number of single-family permits combined accounted for 63.2% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 66,055 permits over the first five months of 2025; This is a decline of 8.7% compared to the same period last year. The second highest state, Florida, decreased by 12.2%, while the third highest, North Carolina, posted a decline of 3.9%.

Between May 2025 YTD and May 2024 YTD, 27 states recorded growth in multifamily permits, while 23 states and the District of Columbia recorded a decline. Iowa (+168.0%) led the way with a sharp rise in multifamily permits from 781 to 2,093, while Alabama had the biggest decline of 54.7% from 1,676 to 760.

The ten states issuing the highest number of multifamily permits combined accounted for 61.1% of the multifamily permits issued. Over the first five months of 2025, Florida, the state with the highest number of multifamily permits issued, experienced an increase of 14.5%. Texas, the second-highest state in multifamily permits, saw an increase of 12.7%. California, the third largest multifamily issuing state, increased by 1.1%.

At the local level, below are the top ten metro areas that issued the highest number of single-family permits.

For multifamily permits, below are the top ten local areas that issued the highest number of permits.

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In Research & Trends

Lot Values Trend Higher in 2024

July 14, 2025 No Comments

Despite shrinking lot sizes, values for single-family detached spec home lots continued to rise, with the national median outpacing U.S. inflation and reaching a new high in 2024. The U.S. median lot value for single-family detached for-sale homes started in 2024 stood at $60,000, according to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data.

Even though the national median lot value grew faster than U.S. inflation in 2024, it remains below the record levels of the housing boom of 2005-2006, when adjusted for inflation. At that time, half of the lots were valued at or over $43,000, equivalent to about $67,000 when converted into inflation-adjusted 2024 dollars.

Rising lot values stand out against the backdrop of dramatic shifts towards smaller lots in new spec home construction in recent years. Since the housing boom of 2005-2006, the share of lots under 1/5 of an acre rose from 48% in 2005 to 65% in 2024. Consequently, even though current median lot values are not record-breaking in real terms, they reflect a very different mix of lots compared to the housing boom years or even a decade ago.

The fact that lot values continue to appreciate as their sizes shrink reflects ongoing challenges builders face in obtaining lots. Although lot shortages are not quite as widespread as they were in 2021, their current incidence, recorded by the May 2025 survey for the NAHB/Wells Fargo Housing Market Index (HMI), remains elevated, with 64% of builders rating the supply of developed lots as low or very low.

There is a substantial variation in lot values and appreciation across U.S. regions. New England and the Pacific stand out as the two divisions with the most expensive lots. Per the latest SOC data, half of all single-family detached (SFD) spec homes started in New England in 2024 were built on lots valued at or over $150,000. New England is known for strict local zoning regulations that often require very low density. As a matter of fact, the median lot size for single-family detached spec homes started in New England in 2024 was three times the national median. Therefore, it is not surprising that typical SFD spec homes in New England are built on some of the largest and most expensive lots in the nation.

The regional differences in lot sizes cannot fully explain the wide variation in lot values. The Pacific division, where the developable land is scarce, has the smallest lots. However, its median lot value reached $152,000 in 2024, the highest median in the nation. As a result, the Pacific division lots stand out as the most expensive in the country in terms of cost per acre.

The Middle Atlantic division hit a new record high in 2024, with half of the lots for SFD spec home starts valued at or above $97,000. This made the Middle Atlantic the third most expensive division in the U.S.

The East South Central and South Atlantic divisions are home to some of the least expensive spec home lots in the nation. The East South Central division recorded the lowest median lot value, at $48,000. Typical lots here are also significantly larger than the national median, thus defining some of the most economical lots, as well as the lowest cost per acre in the U.S. The neighboring South Atlantic is another division where the median lot value ($53,000) is below the national median of $60,000.

Lots in the West South Central, which includes Texas, appreciated dramatically over the last decade. In 2012, half of the SFD spec homes were started on lots valued at or below $30,000, close to half of the current median of $58,000.

For this analysis, median lot values were chosen over averages, since averages tend to be heavily influenced by extreme outliers. In addition, the Census Bureau often masks extreme lot values in the public use SOC dataset, making it difficult to calculate averages precisely, but medians remain unaffected by these procedures.

This analysis is limited to single-family speculatively built homes by year started and with reported sales prices. For custom homes built on an owner’s land with either the owner or a builder acting as the general contractor, the corresponding land values are not reported in the SOC. Consequently, custom homes are excluded from this analysis.

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In Research & Trends

Two or More Story Home Starts Rebound in 2024

July 2, 2025 No Comments

Over half of new single-family homes built in 2024 were two or more stories, according the recent release of the Census Bureau’s Survey of Construction (SOC). After declining in 2023, the share of homes started with two or more stories increased again in 2024, continuing the upward trend in place since 2020.

Nationwide, the share of new homes with two or more stories rose from 51.3% in 2023 to 52.5% in 2024, while the share of new homes with one story fell from 48.7% to 47.5%. Nationally, there were more multi-story homes built in 2024, however, this share varied significantly across the nation.

New homes started in the Midwest and South generally showed a stronger preference for single-story homes. In the Midwest (West North Central and East North Central), 58.8% and 50.7% of new homes started were one story, while in the South (East South Central and West South Central), the shares were 59.5% and 58.1%. However, the South Atlantic division was an exception, with one story homes falling to 44.4%, the lowest since 2019.

Although single story homes are more common in the Midwest and South, their shares declined in 2024 across the East North Central (Midwest), South Atlantic (South) and East South Central (South). This suggests a slow upward trend in two or more story homes across the South after COVID.

Following the national trend, five of the nine divisions saw a greater share of newly-built two or more story homes. The highest two or more story shares of new homes were concentrated in the Northeast and West, with Middle Atlantic and New England at 75.9% and 69.7%, while the Pacific and Mountain reached 57.9% and 56.8%, respectively. However, both Northeast divisions declined from 2023 levels, with New England dropping to its lowest two or more story share since NAHB started tracking in 2017. Meanwhile, new homes started with two or more stories in the Mountain and Pacific divisions both experienced increases in their two or more stories shares.

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