Homebuilding Still Losing Ground as Permits Slip to a Post-Pandemic Low
According to a new Zillow report, homebuilding entered the year on a down note.
Completions for detached, single-family homes fell for the third straight year in 2025, and permitting trends show the slowdown of recent years has carried into 2026, Zillow said.
Over the 12 months through May 2026, there were about 1.42 million residential permits issued nationwide — down 2.2% from the prior 12-month period, Zillow noted in a new report. It said the retreat was broad but uneven: A handful of major metros posted significant declines while a few others surged.
According to Zillow, when judged against the pre-pandemic trajectory, the residential permitting trendline from 2016 through 2020 — permitting is running 19.2% below where it would have been had that trend held.
Permitting, Zillow noted, has fallen on a year-over-year basis for 42 straight months and is now the furthest below the pre-pandemic trendline it’s been since the pandemic started.
Builders Pull Back
Here’s the takeaway: Builders are pulling back in response to a softer market, especially where new construction activity has been highest in recent years. The housing shortage that helped kindle the boom remains intact and raising a warning sign for affordability in the years ahead, Zillow said.
Markets with the largest declines in permitting activity
Many of the markets with the biggest permitting pullbacks are in the Sun Belt, which led the pandemic building boom and are now working through elevated inventory.
Among the 50 largest metro areas, Zillow noted that San Antonio, Austin, Baltimore, Las Vegas and Orlando experienced the steepest drops in total residential permits over the year ending May 2026 relative to the prior 12 months.
Residential building permits are a leading indicator of economic activity, particularly in housing, construction, and consumer spending. Economists, policymakers and real estate analysts use them to help gauge where the economy may be headed.
Full Year 2025: What Builders Actually Built
According to Zillow, the recent permitting numbers show intent going forward, while the data from 2025 shows what’s actually being built.
The year 2025 was another step back for single-family, detached homes, with completions falling 2.5% — the third consecutive annual decline, Zillow said. While the roughly 817,000 homes completed in 2025 is a post-2020 low, it’s still 4.4% more homes than were completed in 2019, Zillow said.
Completions for attached homes fell, too, but that’s after a major increase in 2024, Zillow said. Attached completions jumped 22.6% in 2024, so even after a 1.8% decline in 2025, completions are well above where they have been in recent years.
Zillow noted one bright spot.
Builders are completing homes more quickly as the pandemic-era backlog clears. The median detached home completed in 2025 took six months from start to completion, down from seven months at the height of the supply-chain crunch in 2022 and 2023, Zillow said. Attached homes, which are more complex to build, came in around seven months, also faster than a year earlier.
Tighter Lots, Smaller Homes
The homes builders completed in 2025 were also a touch smaller.
Zillow said the median newly completed detached house was about 2,300 square feet, down from 2,400 before the pandemic, on a median lot of roughly 8,700 square feet, down from 9,000 in 2019. The online brokerage noted that attached homes told the same story at a smaller scale — a median of about 1,700 square feet in 2025, down from 1,800 in 2019.
According to Zillow, the national medians cloak a wide regional range.
Among detached homes completed in 2025, typical size ran from about 2,700 square feet in the Middle Atlantic to roughly 2,000 in the West North Central. Lot sizes vary even more — New England’s median new-home lot was about 56,600 square feet (well over an acre, reflecting rural, large-parcel building), versus roughly 6,100 square feet in the Pacific division, where land is scarce and lots are tight.
