In August 2025, the number of new single-family homes being built in the U.S. dropped to its lowest point in over two years. The seasonally adjusted annual rate fell by 7.0%, reaching just 890,000 units. This decline is mainly due to an oversupply of unsold homes, which has led builders to reduce the number of new homes they’re constructing. The number of permits for future homebuilding also dropped by 2.2%, indicating that fewer new projects are expected to begin in the near future.
The current inventory of unsold homes is at its highest level since 2007. As a result, builders are offering discounts and other incentives to attract buyers. Despite mortgage rates recently falling to 6.35%, the housing market remains weak, with low consumer confidence and uncertainty in the job market continuing to hold back demand for new homes.
Economists predict that the housing sector will continue to hinder overall economic growth until at least mid-2026. The Federal Reserve’s interest rate cuts, designed to boost the economy, are expected to have limited effect on the housing market due to ongoing affordability issues and concerns about the labour market.
Overall, experts do not anticipate a significant recovery in the housing market until 2027, leaving little optimism for a quick rebound in construction and sales.
