Single-Family Home Construction Dips as Builders Admit Making Price Cuts To Spur Sales
The June rate for units in buildings with five units or more was 414,000.
'A jump in multifamily construction led to a small uptick in housing permits and starts in June, but overall construction remains weak, with single-family permits and starts at 11+ month lows,' says Danielle Hale, chief economist at Realtor.com®.
In June, 1,397,000 building permits were issued; housing starts (which represent the beginning of new construction) totaled 1,321,000, and the number of new homes completed stood at 1,314,000.
'These lows in single family construction come as nearly 2 in 5 builders reported making price cuts in June, underscoring the price sensitivity of today's home shoppers,' says Hale.
The latest Housing Market Index (HMI) survey from the National Association of Homebuilders (NAHB) revealed that 38% of builders reported cutting prices in July—that's the highest percentage since NAHB began tracking this figure monthly in 2022.
That number is a percent higher from when 37% of builders reported cutting prices in June, 34% in May, and 29% in April.
Economic factors
Despite the decrease in housing starts, mortgage applications for new home purchases increased 8.5% in June, compared from a year ago, according to the Mortgage Bankers Association (MBA) builder application survey—but compared to May 2025, applications decreased by 4%.
'A cloudier economic outlook and elevated mortgage rates continues to weigh on potential buyers, while growing inventory, builder incentives, and lower prices have brought some buyers back to the market,' says Joel Kan, MBA's vice president and deputy chief economist.
The single-family construction decline comes on the heels of mortgage interest rates increasing for two consecutive weeks. The average rate on a 30-year fixed home loan inched up to 6.75% for the week ending July 17, according to Freddie Mac. This week's rate is up from 6.72% last week. For perspective, rates averaged 6.77% during the same time in 2024.
Add to that inflation rising in June—it's highest level since February. Consumer prices rose to 2.7%, up from 2.4% in May, according to the U.S. Labor Department's consumer price index.
'June's numbers mark a slight shift from May's cooler-than-expected inflation data, but it remains unclear if and when the U.S. economy will feel the true brunt of a slew of new tariffs,' says Realtor.com® Senior Economist Jake Krimmel.
This week, President Donald Trump said he plans to tell more than 150 countries what tariff rate they will face. The president explained it'll be the 'same for everyone.'
'They're not big countries, and they don't do that much business. Not like the ones we've agreed with, like China, like Japan,' Trump told reporters during a meeting with Bahrain's Crown Price at the White House, according to Politico.
Several countries have already received letters letting them know that the tariff rate increase will take effect Aug. 1. The European Union, Japan, Mexico, Canada, and South Korea will be among the countries affected.
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