New home construction is losing momentum across the United States, with some of the steepest declines concentrated in Sun Belt cities that helped drive the country’s pandemic-era building boom.
Residential building permits are now a record 19.4 percent below the pre-pandemic trend, according to a new Zillow analysis, signaling that the recent homebuilding boom is losing steam even as the country continues to face a significant housing shortage.
“The concern is that when conditions improve and buyers return, the thinner pipeline could mean a tighter market that drives up prices,” said Kara Ng, senior economist at Zillow.
These Cities Are Seeing the Biggest Drops in Home Construction
More than 1.42 million residential building permits were issued nationwide in the 12 months ending in July 2026, according to Zillow. Permitting has now fallen year over year for 44 consecutive months.
Austin recorded the largest year-over-year decline in permitting among major U.S. markets, with permits falling 25.3 percent over the past year.
San Antonio followed with a 24.1 percent decline, while Orlando, Charlotte and San Diego also saw permitting fall by roughly 20 percent.
Other major markets also recorded substantial declines, including San Diego (19.2 percent), Baltimore (19 percent), Chicago (18.6 percent) and Columbus (16.8 percent).
The declines extended to Nashville (14.6 percent), Phoenix (13.5 percent), Jacksonville (13.4 percent), Houston (13 percent) and Dallas (11.9 percent).
The pullback is concentrated in markets that led the pandemic-era construction boom, particularly across the Sun Belt. Zillow said some of those markets have seen a surge in overall housing inventory, making it more difficult for builders to justify starting new projects.
“Builders continue to face significant challenges from elevated construction costs and affordability pressures,” Bill Owens, chairman of the National Association of Home Builders, said in late August.
“Higher mortgage rates are keeping many prospective buyers on the sidelines, while rising material, gas and diesel costs are adding to the cost of construction. These challenges are making it increasingly difficult for builders to deliver homes at prices that buyers can afford.”
These Cities Are Still Seeing Homebuilding Gains
The slowdown isn’t happening everywhere.
Permitting gains are occurring mostly on the coasts and in the Midwest, where construction had been more subdued during the boom of the past several years.
San Jose saw permits more than double over the past year, rising 122 percent. Seattle followed with a 35.8 percent increase, while permitting rose 32.9 percent in Birmingham, 30.6 percent in Los Angeles and 29 percent in San Francisco.
Those large percentage gains need some context. In markets where construction has been depressed for years, even a relatively modest increase in new projects can produce a significant percentage swing.
Los Angeles, for example, issued 34,696 permits over the past year—barely more than half the 61,275 permits issued in Dallas and the 59,214 issued in Houston during the same period.
Other markets also saw permitting increases, including New York (19.4 percent), Salt Lake City (20.3 percent), Boston (14.4 percent) and Tampa (14.5 percent).
New Homes Are Getting Smaller
Builders are completing homes more quickly as the pandemic-era backlog clears, while also favoring smaller homes as buyers contend with stretched affordability.
The median detached home completed in 2025 took six months to build, one month faster than during the height of the supply-chain crunch in 2022 and 2023.
At the same time, newly completed homes are getting smaller. The median detached home completed in 2025 measured 2,300 square feet, down from 2,400 square feet in 2019. Median lot sizes also declined, from 9,000 square feet in 2019 to 8,700 square feet in 2025.
Still, the overall number of new detached single-family homes being completed is falling. About 817,000 were completed in 2025, down 2.5 percent from 2024 and marking the third consecutive annual decline. It was the lowest annual total since 2020, although it remained 4.4 percent above the 2019 level.
The changes come as builders try to adapt to a softer housing market while keeping new homes within reach of buyers.
“Builders are responding to a softer market by pulling back, especially in the places they’d been building the most,” Ng said.
“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.”
Zillow estimates that the U.S. is currently facing a housing deficit of 4.7 million units. The company said increasing density could be one way to help address the shortage, noting that more than 300,000 empty lots were listed on Zillow in June.
How Has America’s Housing Supply Changed Under Trump?
The slowdown in new construction comes as increasing the nation’s housing supply has been a policy focus of the Trump administration.
In March 2026, President Donald Trump signed an executive order directing federal agencies to reduce regulatory barriers that the administration says are making home construction more expensive and slowing development. The administration said the changes were intended to lower construction costs, increase the supply of homes and make housing more affordable.
The number of homes available for sale has improved modestly during Trump’s first year back in office, but that does not necessarily mean the country is building enough new homes to address its longer-term housing shortage.
Mortgage rates remain elevated, with the average 30-year fixed rate at 6.76 percent as of Sept. 10, according to Freddie Mac, keeping borrowing costs high for buyers and contributing to pressure on both demand and new construction.
The Federal Reserve is widely expected to raise its benchmark interest rate Wednesday for the first time in more than three years, as persistent inflation and higher energy prices weigh on the central bank’s decision. A rate increase would add to borrowing costs for consumers and businesses. Trump has repeatedly called for lower interest rates.
Contact Newsweek editors on this story: Jason Lemon and Gray R. Thomas