Housing permits near cycle lows even as housing starts beat estimates

Housing starts beating estimates while housing permits are near cycle lows is an odd situation, but I am here to make sense of it and explain where exactly we are in the housing construction cycle. First, we have to always remember that housing starts are a very volatile number with a lot of revisions. Whenever you’re looking at this data line, you need to look at all the data variables together.

Today, let’s talk nerdy because with the passage of the 21st Century ROAD to Housing Act, we need to bring some reality to this TV show.

Housing starts

From Census: Housing Starts: Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,427,000. This is 19.0 percent (±15.9 percent) above the revised May estimate of 1,199,000 and is 3.5 percent (±14.3 percent)* above the June 2025 rate of 1,379,000. Single-family housing starts in June were at a rate of 895,000; this is 0.2 percent (±10.2 percent)* below the revised May figure of 897,000. The June rate for units in buildings with five units or more was 513,000.

Housing starts last month had a big miss of estimates as multifamily starts collapsed; this month housing starts did beat estimates, as multifamily starts had an epic rise. This data line is very volatile and can swing the month-to-month data in a big fashion both in a positive and negative direction. As you can see in the chart below, this index isn’t very stable.

Single-family starts had a small decline, and since single-family construction is typically much higher than multifamily, you can see in the charts below why total housing permits are near cycle lows, as single-family permits have been falling for some time. 

Housing Permits

Housing Permits: Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,367,000. This is 3.0 percent below the revised May rate of 1,410,000 and is 2.3 percent below the June 2025 rate of 1,399,000. Single-family authorizations in June were at a rate of 871,000; this is 2.4 percent below the revised May figure of 892,000. Authorizations of units in buildings with five units or more were at a rate of 445,000 in June.

Housing permits are still close to cycle lows, as it has been hard to get traction with new home sales. If I take away the COVID highs in sales, we really haven’t had growth in new home sales in 9.5 years, just moving back and forth. Now that completed unit sales are elevated for the builders, they tend to get more bullish on issuing permits at this stage of the cycle. This can explain why housing permits are near cycle lows.

The most recent builders’ confidence data speaks volumes about what they think of the future; mind that this survey is for smaller builders, not the big publicly traded builders who have much bigger balance sheets to operate with.

Conclusion

Housing starts beat estimates, while housing permits are near cycle lows — the data above provides some clarity to that headline now.

Yesterday I wrote about how I am a bit skeptical of the ROAD Act making a big difference in housing construction while demand isn’t growing. If you believe in supply and demand economics, would you be building a lot more homes if you’re not sure if the demand will be there to buy them? Mind that the builders have been providing sub-6% mortgage for homebuyers and that is a reason why new home sales are still at 2019 levels, but existing home sales are not.