Where home construction is rising

Single-family housing starts in the United States fell by 6.9% in 2025, totaling 939,182 units as the industry struggled with persistent economic headwinds. This decline, reported by the National Association of Home Builders (NAHB), reflects the impact of high mortgage rates and elevated construction costs on new inventory levels. For the residential mortgage sector, these regional variations in construction activity signal shifting opportunities for loan originations and highlight the ongoing challenge of housing supply shortages.

According to an analysis of U.S. Census Bureau data by the NAHB, the 2025 decline in single-family starts reversed the growth seen in 2024, when builders began construction on just under 1.01 million homes. Jing Fu, NAHB’s senior director of forecasting and analysis, attributed the downturn to a combination of high mortgage rates, rising builder costs, and supply-side constraints. The data revealed an "uneven" market, where significant drops in high-volume regions like the Sun Belt outweighed gains in other areas, ultimately thwarting the homebuilding momentum seen earlier in the decade.

Regional data showed that the South Atlantic division remained the nation's leader with 308,189 starts, despite a 10.5% year-over-year decline. Other major hubs also saw contractions, with the West South Central region—including Texas—dropping 8.8% to 171,247 starts, and the Mountain division falling 15.4% to 106,549 units. Collectively, these three busiest divisions account for more than 60% of all housing starts. In contrast, growth was observed in the East South Central region, which rose 13.7% to 62,674 starts, and the East North Central region, which grew by 8% to 87,589 units.

Beyond interest rates, the NAHB highlighted regulatory burdens and material costs as significant barriers to residential growth. Chief Economist Robert Dietz noted that government regulations, taxes, and fees now account for more than 26% of the price of an average single-family home, urging for reforms in zoning and permitting to spur development. Meanwhile, the supply price index for residential construction materials rose 4.4% year-over-year in May, the fastest pace since early 2023. These pressures led Fitch Ratings to revise its outlook, now projecting a 2.5% fall in new-home sales and a 4.5% drop in single-family starts for 2026.