The housing construction sector continues to show a slightly negative trend, although this has weakened significantly compared to 2024 and 2025. A key factor is the difference between housing starts and completions: when more units are completed than started, the construction pipeline shrinks. After a strong upswing in 2021 and 2022—particularly in multifamily housing, where starts significantly exceeded completions and created a large backlog—this trend reversed as interest rates rose. New project starts declined while existing projects were completed, leading to a sharp contraction in the pipeline and a slowdown in construction activity. This had a dampening effect on inflation and contributed to central bank rate cuts. The situation is now moving back toward equilibrium but remains slightly negative, suggesting that construction activity will continue to decline in the coming months, albeit at a slower pace.
The impact on housing prices depends on several factors. On the one hand, lower construction activity can lead to tighter supply and rising prices over the long term. On the other hand, employment plays a central role: a sharp decline in construction reduces jobs in the sector and related industries, weakening overall demand and putting downward pressure on home prices. Currently, the supply of single-family homes stands at around seven to seven and a half months, above the balanced level of roughly six months, which generally indicates downward pressure on prices.
However, the picture varies significantly by region. In parts of the so-called Sun Belt, such as Florida and Texas, higher supply levels are leading to declining prices. In contrast, prices remain relatively high in the Northeast and Midwest, where supply is much tighter due to limited new construction. Most building activity continues to be concentrated in the fast-growing southern regions, reinforcing imbalances in the housing market.