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By Giulia Carbonaro
Senior Reporter
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Southern states have fueled an unexpected jump in construction activity for single-family homes across the country last month, despite builders' ongoing struggles with rising costs, labor shortages, and recent market headwinds.
In July, according to the latest data by the United States Census Bureau and the Department of Housing and Urban Development (HUD), single-family housing starts rose 2.8 percent from a month earlier, to a seasonally adjusted annual rate of 939,000. This is the number of single-family homes that builders would begin if development kept this pace for the next 12 months.
While the nationwide figure is still relatively modest, reflecting reduced activity in the single-family home construction market, the South reported a much higher increase. In the region, single-family starts surged 13 percent compared to a month earlier and 22 percent compared to a year earlier.
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In the Midwest, Northeast, and West, single-family housing starts actually fell on both a monthly and annual basis.
What Do These Figures Tell Us About the U.S. Housing Market?
The rise in single-family housing starts was a surprise for experts keeping an eye on the U.S. housing market, where a recent surge in inventory has been forcing many developers to offer price discounts and other incentives to attract reluctant buyers and offload their completed homes.
This recent increase could be linked to the fact that mortgage rates recently came down, even if only modestly, after signs suggesting that the U.S. labor market is softening. In the week ending August 14, the 30-year fixed-rate mortgage, the most popular home loan among American buyers, fell to an average of 6.58 percent—the lowest level since October 2024.
The fact that the rise is single-handedly driven by the South might also be linked to the region's recent construction boom, which has remained unparalleled in the Midwest, Northeast and West.
Southern states like Florida and Texas have been building more new homes than any others in the past few years, but have since drastically cut down on construction as their markets have seen an influx of new listings, many of which are taking increasing periods of time before going under contract.
This is why experts and industry insiders remain cautious about celebrating the unexpected increase in single-family housing starts. Daryl Fairweather, chief economist at digital real estate brokerage Redfin, told Newsweek the increase "is an aberration."
"This particular series has always been noisy. You can see in their [U.S. Census Bureau] press release, they state the error band for the year-over-year change on page 5 as 27.4 percent ± 39.3 percent which means the actual growth rate could be anywhere between 11.9 percent to +66.7 percent," she said.
"All things considered, this month's new construction data does not provide many clear signals as to where homebuilding is heading," Realtor.com senior economist Joel Berner said in a report. "We know that new home sales have been quite slow this summer and that tariffs are adding complication and expense to building activity, but builders do not appear to be backing down much more than they already have."
What Do Homebuilders Say?
Builders remain pessimistic about the future of housing construction, even in the face of the recent surprising increase in single-family housing starts.
"Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs," said Buddy Hughes, chairman of the National Association of Home Builders (NAHB), in a press release.
"These headwinds were reflected in our latest builder survey, which indicates that affordability is the top challenge to the housing market," Hughes, a home builder and developer from Lexington, North Carolina, said.
The latest NAHB survey found that overall builder confidence in the market for newly built single-family homes was 32 in August, down 1 point from a month earlier. Any score below 50 indicates that builders do not feel great about the market.
"The slowdown in single-family home building has narrowed the home building pipeline," said NAHB chief economist Robert Dietz. "There are currently 621,000 single-family homes under construction, down 1 percent in July and 3.7 percent lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply."
Update, 8/21/2025 3:31 a.m. ET: This article has been updated with a comment from Redfin's Daryl Fairweather.
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