Single-family housing starts fell as elevated mortgage rates kept buyers sidelined and builder confidence near multi-year lows
Single-family home construction fell in July, with housing starts down 9.9% from June and 15.7% below year-ago levels, further evidence that persistently high mortgage rates are draining the pipeline that brokers depend on for purchase volume.
The US Census Bureau reported Tuesday that single-family housing starts came in at a seasonally adjusted annual rate of 808,000 in July, pulling total residential starts to 1,239,000. That's down 12.4% from June and 13.5% below the July 2025 figure of 1,432,000.
No region was spared. The Northeast posted the steepest single-month decline, with privately-owned housing starts falling 27.1%, while the West contracted 13.8%.
The Midwest and the South, which had served as relative bright spots earlier in 2026, also retreated, down 5.0% and 4.9%, respectively.
Housing completions fell 9.1% in July to 1,212,000 and now sit 16.8% below their July 2025 pace, narrowing what had been a near-term buffer for supply even as the forward pipeline weakens.
The 30-year fixed-rate mortgage stood at 6.67% as of Aug. 13, according to Fannie Mae, slightly below its 2026 peak, but still the primary constraint on buyer activity.
Builder confidence stays under pressure
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index fell to 34 in July. That's the 15th consecutive month below 40 and the longest such run since 2012, according to NAHB data.
The August reading showed builders still reporting subdued confidence based on sales expectations and prospective buyer traffic, though views on current sales conditions offered a modest uptick.
"Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook," said NAHB Chairman Bill Owens.
Permits point to cautious optimism ahead
There was a qualified forward signal. Overall residential building permits climbed 5.0% from June to a seasonally adjusted annual rate of 1,443,000 in July. That's 3.1% above the July 2025 rate.
Single-family authorizations rose 2.5% to 894,000.
Since permits typically precede construction by several months, the uptick suggests some builders are anticipating improving demand heading into the fall.
Whether that optimism is warranted remains tied to the Federal Reserve's next move.
“I don’t expect a big change in rates. I don’t expect a big swing,” Fif Ghobadian, senior vice president of mortgage lending at OriginPoint, told Mortgage Professional America.
“I expect [rates] to stay the same – maybe drop a tiny bit.”
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