September construction data show homebuilding retreating sharply, with single-family permits and starts both falling year over year
Another month, another discouraging read for the US housing market.
Government data released Tuesday confirmed that the construction slowdown gripping the mortgage industry deepened in September, as surging borrowing costs pushed single-family homebuilders further to the sidelines and left brokers with an even thinner pool of new purchase inventory to work with.
US single-family housing starts fell 4.6% in September to a seasonally adjusted annual rate of 859,000 units, according to the US Census Bureau’s Monthly New Residential Construction report released Tuesday.
Total privately-owned starts across all housing types dropped 5.2% from August to 1,221,000, sitting 7.4% below the September 2025 rate of 1,319,000.
Building permits pointed to continued weakness ahead. Single-family authorizations declined 4.0% month over month to 845,000 units.
Total permits across all housing categories eased 0.2% to 1,400,000, already 3.0% below the September 2025 rate of 1,444,000, the Census Bureau reported.
Builder confidence sinks to its lowest since June 2012
The construction retreat coincided with the 30-year fixed mortgage rate averaging 7.40% last week, its highest level in nearly three years, according to the Freddie Mac Primary Mortgage Market Survey.
Treasury yields have climbed sharply as inflation pressures linked to the ongoing US-Israeli conflict with Iran flow directly into mortgage pricing.
The National Association of Home Builders (NAHB) reported Monday that single-family homebuilder sentiment dropped in October to its lowest reading since June 2012. The group cited escalating material costs, rising diesel prices, and worsening labor conditions tied to immigration enforcement as compounding factors.
Joel Kan of the Mortgage Bankers Association says new home purchase applications fell to their lowest level in six years as rising borrowing costs weighed on buyers, particularly first-time purchasers relying on FHA financing. https://t.co/Pf7V8lz8zm
— Mortgage Professional America Magazine (@MPAMagazineUS) October 15, 2026
Supply gap keeps prices elevated despite slowing demand
Privately-owned housing completions offered a partial offset, rising 2.2% from August to 1,192,000 in September. That figure remains 14.0% below the September 2025 rate of 1,386,000.
However, the Census Bureau confirmed, a sharp annual shortfall that underscores how the construction pipeline has thinned heading into the year’s final quarter. Single-family completions eased 2.4% to 840,000.
A growing overhang of unsold new homes is reducing builders’ incentive to break ground, even as a structural national housing shortage continues to keep prices elevated.
Earlier documentation of how single-family construction declines directly squeeze broker purchase pipelines mapped the same pressures building through July, with the August data accelerating the same trends that September has now deepened.
With housing affordability a centerpiece of midterm campaign messaging ahead of the November 3 elections and residential investment stalling after a brief Q2 rebound, the pressure on origination activity is set to persist.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
