Map Shows Cities Facing New Home Construction Slump

New home construction in the United States is cooling, with some of the biggest declines seen in cities across the Sun Belt that previously fueled a housing boom during the pandemic. Residential building permits are now 19.4% below pre-pandemic trends, according to a Zillow analysis, indicating the recent surge in homebuilding is losing steam even as the country grapples with a significant housing shortage.

Kara Ng, a senior economist at Zillow, warns that a thinner pipeline of new homes could drive up prices once buyers return to the market. More than 1.42 million residential building permits were issued nationwide in the 12 months ending in July 2026, marking 44 consecutive months of year-over-year declines. Austin led the declines, with permits dropping 25.3% year-over-year, followed by San Antonio (24.1%), Orlando (20%), Charlotte (20%), and San Diego (19.2%).

Other major markets such as Baltimore (19%), Chicago (18.6%), and Columbus (16.8%) also experienced substantial drops. The slowdown is primarily in markets that led the pandemic-era construction boom. Zillow notes that some of these markets have seen a surge in overall housing inventory, making it harder for builders to justify new projects due to elevated costs and affordability pressures.

Builder challenges include high construction costs, affordability pressures, rising mortgage rates, and increasing material costs. Permitting gains are occurring more on the coasts and in the Midwest, where construction previously lagged. San Jose saw permits rise by 122%, while Seattle, Birmingham, Los Angeles, and San Francisco also recorded notable increases.

However, the overall number of new detached single-family homes completed fell to 817,000 in 2025, down 2.5% from 2024, marking the third consecutive annual decline. The U.S. faces a housing deficit of 4.7 million units, with Zillow suggesting that increasing density could help alleviate the shortage.