The new home construction boom is running out of steam
Zillow’s latest analysis shows U.S. housing permits and single‑family completions sliding even as a multi‑million‑unit housing shortage persists.
Rhea-AI Summary
Zillow (Z) reports that after a historic boom, new home construction is slowing as permitting and completions decline.
Over the 12 months ending July 2026, U.S. residential building permits fell 1.7% year over year to about 1.42 million, and are running a record 19.4% below the 2016–2020 pre‑pandemic trend. Permitting has declined year over year for 44 consecutive months. Detached single‑family completions dropped for the third straight year in 2025, down 2.5% from 2024 to roughly 817,000 homes.
Zillow highlights sharp permit pullbacks in Sun Belt boom markets such as Austin (-25.3%) and San Antonio (-24.1%), alongside gains in coastal and Midwestern metros including San Jose (+122%), Seattle (+35.8%) and Los Angeles (+30.6%).
Builders are shifting toward smaller, denser and faster‑built homes: the median detached home completed in 2025 was 2,300 sq. ft. on an 8,700 sq. ft. lot and took six months to construct. Zillow cites a U.S. housing deficit of 4.7 million units and notes that turnkey homes sell for 2.9% above expected values, while fixer‑uppers sell for 14% less.
Positive
- Residential permits still total 1.42 million in 12 months through July 2026
- Detached single‑family completions in 2025 remain 4.4% above 2019 levels
- Median build time for detached homes shortened to 6 months in 2025
- Home sizes shrank to 2,300 sq. ft., improving entry‑level affordability
- Turnkey homes command a 2.9% price premium versus expected values
- Permits surged in select markets: San Jose +122%, Seattle +35.8%, Los Angeles +30.6%
Negative
- U.S. permits are 1.7% lower year over year and 19.4% below pre‑pandemic trend
- Detached single‑family completions fell 2.5% in 2025, third annual decline
- Zillow cites a nationwide housing deficit of 4.7 million units
- Sun Belt boom markets saw steep permit drops: Austin -25.3%, San Antonio -24.1%
- Many metros remain far below trend, e.g., Minneapolis at -73.1% versus pre‑pandemic levels
- Fixer‑uppers sell for 14% below expected values, limiting returns for owners of outdated homes
Key Figures
- Residential building permits
- More than 1.42 million permits
- 12 months ending July 2026
- Permit change
- -1.7%
- Year over year through July 2026
- Permit gap
- -19.4%
- Versus the 2016-2020 pre-pandemic trend
- Consecutive permit declines
- 44 months
- Year-over-year permitting declines
- Detached home completions
- About 817,000 homes
- 2025; down 2.5% from 2024
- Housing deficit
- 4.7 million units
- Reported U.S. housing deficit
- Turnkey home premium
- 2.9% more than expected
- Sale price for turnkey homes
- Fixer-upper discount
- 14% less
- Sale price for fixer-uppers
Historical Context
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Home sales and pending listings declined amid elevated mortgage rates
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
AI-generated analysis. How Rhea-AI works. Not financial advice.
With permitting at a post-pandemic low, the housing shortage at the root of today's affordability crisis could deepen
- Residential building permits fell
1.7% in the year ending July 2026 and are now running a record19.4% below the pre-pandemic trend line. - Detached single-family home completions dropped
2.5% in 2025 to about 817,000, the third consecutive annual decline and the lowest total since 2020. - Builders are shrinking home sizes to keep prices within reach.
Over the 12 months ending July 2026, more than 1.42 million residential building permits were issued nationwide, down
Bright spots are that builders are completing homes more quickly as the pandemic-era backlog clears, and favoring smaller homes that are more affordable for financially stretched buyers. The median detached home completed in 2025 took six months to build, a month faster than at the height of the supply-chain crunch in 2022 and 2023.
"Builders are responding to a softer market by pulling back, especially in the places they'd been building the most," said Kara Ng, senior economist at Zillow. "That's an understandable reaction to today's conditions, but the housing shortage that drove the building boom is still very much intact. The concern is that when conditions improve and buyers return, the thinner pipeline could mean a tighter market that drives up prices."
The permitting pullback is concentrated in markets that led the pandemic-era boom, largely in the Sun Belt.
Permitting gains are happening mostly on the coasts and in the Midwest, where construction had been more subdued during the boom of the past few years. Permits more than doubled in
What builders built in 2025
The number of detached single-family homes built in 2025 fell for the third straight year, down
The median newly completed detached home measured 2,300 square feet in 2025, down from 2,400 in 2019. Lots have shrunk by more, down to a median of 8,700 square feet in 2025 from 9,000 in 2019. With a housing deficit of 4.7 million units and more than 300,000 empty lots listed on Zillow in June, increasing density is one of the most actionable steps toward building enough homes.
Buyers today value homes that are move-in ready
Buyers have signaled their interest in homes that are ready from day one without needing renovations or repairs, and new construction fits that bill. Turnkey homes sell for
For home shoppers considering newly built homes, Zillow makes it easy to explore available homes, communities, floor plans and features in one place. Home shoppers can discover new-construction options, view rich listing details and connect directly with builders as they consider their next move.
|
Metro Area* |
Permits Year |
Permits Versus |
|
|
-1.7 % |
-19.4 % |
|
|
19.4 % |
71.9 % |
|
|
30.6 % |
53.6 % |
|
|
-18.6 % |
-18.5 % |
|
|
-11.9 % |
-28.5 % |
|
|
-13.0 % |
-31.6 % |
|
|
18.8 % |
-30.4 % |
|
|
5.1 % |
-21.4 % |
|
|
-7.4 % |
-23.0 % |
|
|
-5.5 % |
-10.5 % |
|
|
14.4 % |
-11.9 % |
|
|
-13.5 % |
-39.7 % |
|
|
29.0 % |
-60.3 % |
|
|
-8.8 % |
-60.6 % |
|
|
-5.4 % |
6.5 % |
|
|
35.8 % |
-28.1 % |
|
|
-0.6 % |
-73.1 % |
|
|
-19.2 % |
71.1 % |
|
|
14.5 % |
-35.0 % |
|
|
2.4 % |
-28.0 % |
|
|
-19.0 % |
-66.7 % |
|
|
1.8 % |
30.3 % |
|
|
-22.1 % |
-45.1 % |
|
|
-19.3 % |
-54.7 % |
|
|
-24.1 % |
-54.6 % |
|
|
-0.3 % |
-53.4 % |
|
|
1.1 % |
-29.8 % |
|
|
-2.3 % |
351.6 % |
|
|
26.8 % |
16.0 % |
|
|
-25.3 % |
-59.8 % |
|
|
-14.1 % |
7.7 % |
|
|
3.1 % |
7.0 % |
|
|
-16.8 % |
96.7 % |
|
|
-0.5 % |
26.9 % |
|
|
122.0 % |
-40.0 % |
|
|
-14.6 % |
-17.6 % |
|
|
12.7 % |
47.9 % |
|
|
-13.4 % |
-68.6 % |
|
|
-10.0 % |
15.6 % |
|
|
5.5 % |
96.1 % |
|
|
0.7 % |
-25.6 % |
|
|
3.7 % |
-16.9 % |
|
|
-9.6 % |
-46.0 % |
|
|
-11.6 % |
-39.6 % |
|
|
-7.9 % |
-69.2 % |
|
|
20.3 % |
-52.6 % |
|
|
32.9 % |
182.3 % |
|
*Table ordered by market size |
About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people.
As the most visited real estate app and website in the United States, Zillow connects hundreds of millions of consumers with innovative technology, trusted agents and loan officers, and seamless digital solutions. With industry-leading tools and resources, Zillow supercharges real estate professionals so they can grow their businesses and deliver exceptional client experiences. For renters and housing providers, Zillow offers not only a robust marketplace but a set of end-to-end products and services to streamline applications, leases, payments and more.
Zillow's ecosystem spans the entire home journey — from dreaming and shopping to renting, buying, selling and financing.
Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans®, Zillow Rentals®, Zillow® New Construction, Trulia®, StreetEasy®, Out East®, HotPads®, Follow Up Boss®, ShowingTime®, dotloop® and Zillow® Closing.
All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2026 MFTB Holdco, Inc., a Zillow affiliate.
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SOURCE Zillow
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How are new home sizes and lots changing, according to Zillow?
The median newly completed detached home in 2025 measured 2,300 square feet, down from 2,400 square feet in 2019. Median lot size shrank more sharply, to 8,700 square feet in 2025 from 9,000 square feet in 2019, reflecting a move toward higher housing density.
Which U.S. metros saw the largest declines and increases in permitting?
Among major markets, Austin recorded the largest year‑over‑year permit drop at -25.3%, followed by San Antonio at -24.1%. Other sizable declines included Orlando (-22.1%) and Charlotte (-19.3%). On the upside, permits more than doubled in San Jose (+122.0%), and increased strongly in Seattle (+35.8%), Birmingham (+32.9%), Los Angeles (+30.6%) and San Francisco (+29.0%).
What does Zillow say about buyer preferences for turnkey versus fixer‑upper homes?
Zillow reports that buyers favor move‑in‑ready homes that do not require renovations or repairs. In its data, turnkey homes sell for 2.9% more than expected, while fixer‑uppers sell for 14% less than expected, underscoring stronger demand and pricing power for ready‑to‑occupy properties.
How many empty lots are listed, and why does Zillow emphasize density?
Zillow notes that more than 300,000 empty lots were listed on its platform in June. With a cited housing deficit of 4.7 million units, the company describes increasing density—such as building smaller homes on smaller lots—as one of the most actionable ways to expand housing supply.