August Housing Starts Fall More Than Expected, Permits Drop for Fifth Straight Month

10:38 AM EDT, 09/17/2025 (MT Newswires) -- US housing starts tumbled more than projected in August amid weakness in both single and multi-family units, while building permits dropped for the fifth straight month, government data showed Wednesday.

Housing starts plunged 8.5% sequentially to a seasonally adjusted annual rate of 1.31 million units last month, according the Census Bureau and the Department of Housing and Urban Development. The consensus was for a 4.4% decrease in a survey compiled by Bloomberg, based on an unrevised print for July.

Starts on buildings with at least five units fell 11% month on month in August, while the single-family component dropped 7%. Consolidated housing starts slumped in the South and Midwest, while they rose in the West and Northeast, according to the data.

Building permits, which is a forward-looking indicator of homebuilding, fell by 3.7% sequentially, marking a fifth monthly decline in a row.

The data comes ahead of the Federal Reserve's monetary policy decision later on Wednesday, with markets widely expecting the central bank's Federal Open Market Committee to lower its benchmark lending rate by 25 basis points.

The National Association of Home Builders showed Tuesday that homebuilder confidence held steady at 32 in September. That is a "depressed level" compared with a long-run norm of around 50, BMO Capital Markets Senior Economist Sal Guatieri said on Wednesday.

"Still-elevated mortgage rates, a weak labor market, and sagging home values have depressed demand, while deported construction workers and an earlier spike in lumber costs have hampered supply," Guatieri said. "While mortgage rates are starting to ease, further relief is needed to meaningfully improve affordability in many regions and inspire builders."

Separately, the Mortgage Bankers Association said that mortgage applications in the US soared last week as 30-year fixed interest rates on conforming loan balances hit the lowest since October.

The MBA's market composite index, which measures loan application volume, surged nearly 30% on a seasonally adjusted basis for the week through Friday. Without adjustments, the index was up 43% on a weekly basis.

"Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39%," said Mike Fratantoni, the association's chief economist. "Homeowners responded swiftly, with refinance application volume jumping almost 60% compared to the prior week."

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