New‑home construction data released for August indicate that the housing market is continuing a measured slowdown, according to leading industry analysts. Approximately 1.275 million homes and apartments began construction, a 2.6 % decline from July and a 1.2 % dip compared with August 2025. Building permits were issued for about 1.394 million units, down 2.7 % from July but still 3.5 % higher than a year ago.
Analysts See a Controlled Slowdown, Not a Collapse
Orphe Divounguy, chief economist at Quantitative Research Group and former Zillow economist, called the figures “on trend with the cooling I’ve been flagging.” He emphasized that total starts were essentially flat, describing the situation as a “normalizing, not cracking” market. “It’s not a construction cliff – building is normalizing, not cracking,” Divounguy told The Center Square.
Joel Berner, senior economist at Realtor.com, echoed the sentiment, noting that the data show “neither a housing boom nor cause for serious concern.” He pointed to lingering builder trepidation caused by rising material and labor costs, as well as slower sales, but highlighted a brighter side: permitting activity remains slightly ahead of last year’s pace.
Mortgage Rates and Affordability Remain Key Factors
Divounguy identified mortgage rates and a sluggish labor market as the primary drivers of the current environment. After falling to near 6 % in early 2025, the average 30‑year fixed rate has risen to 6.95 % according to Freddie Mac, with daily estimates occasionally topping 7.2 %.
Higher rates have reduced affordability, keeping many potential buyers on the sidelines. Demand this August was lower than a year ago, leading builders to rely more on incentives such as rate buydowns and other concessions.
Two‑Speed Market: Luxury Outperforms While Non‑Luxury Stays Under Pressure
Divounguy described the market as “two‑speed,” with the luxury segment continuing to outperform while the non‑luxury market remains under stress. Geographic differences are also evident. Markets in Cleveland, Hartford, Kansas City, Richmond and San Francisco are tighter, whereas Sun Belt cities such as Atlanta, Austin, Houston, Miami and Nashville offer more inventory.
Advice for Buyers and Sellers
Both analysts suggest that buyers act now while incentives are still available. “Buyers have the opportunity to take advantage of builders cutting prices and offering incentives now, but if the number of new homes slows significantly, they may not have this opportunity for long,” Berner wrote.
For sellers, Divounguy recommends pricing homes based on current market conditions and competition rather than relying on last year’s comparable sales, especially in Sun Belt markets where inventory is more plentiful.
Outlook
While the August numbers reflect a modest cooling, the overall trend points to a market that is adjusting rather than collapsing. Continued monitoring of mortgage rates, labor market health, and regional inventory levels will be essential for builders, buyers, and sellers alike.
Original reporting: KTBS 3 (Shreveport) — read the source article.
