By mid-2025, the U.S. housing market is still wrestling with two opposing forces: high mortgage rates that slow buyer traffic, and a housing shortage that keeps demand alive. Building permit data from May through July shows how builders are navigating this tension.
Permits fell year over year across most of the country in all three months, but the story is uneven. Some regions are pushing ahead with new projects, while others have tapped the brakes to reassess costs and sales activity.
May’s numbers signaled that construction momentum was cooling. Single-family permits dropped more sharply than multifamily approvals, continuing a pattern seen earlier in the year. Florida metros such as Daytona Beach, Jacksonville, and Lakeland posted steep annual declines, reflecting a pause after several years of intense building.
The Midwest held up better. Smaller cities with steady populations and affordable prices saw permits hold flat or edge higher. Builders there appear confident that local buyers can still qualify for loans despite higher borrowing costs.
June data from NAHB and the Census Bureau showed single-family permits slipping about 7 percent compared with June 2024. Multifamily activity, however, gained modest ground, particularly in parts of the South and Midwest.
Markets with solid gains included Winston-Salem in North Carolina, Knoxville in Tennessee, and Des Moines in Iowa. These metros combine job growth, affordable land, and rising populations — conditions that let builders keep projects moving even as financing remains expensive.
The July release from the Census pointed to a small lift in single-family permits versus June, though totals were still lower than a year earlier. Multifamily authorizations were flat month to month and continued to trail 2024 levels.
Strength centered on a few secondary markets. Des Moines and Knoxville kept up a healthy pipeline of apartment projects, while several Gulf Coast cities in Florida showed signs of life in rental construction.
While national totals are subdued, a cluster of metros is quietly expanding:
Little Rock, Arkansas has more than doubled single-family permits compared with last year. Savannah, Georgia, Winston-Salem, North Carolina, and Oklahoma City show steady increases, helped by new jobs and relatively low home prices. Des Moines and Knoxville are standouts in multifamily development, responding to strong rental demand and limited inventory.
These areas share common traits: growing populations, competitive housing costs, and local economies adding jobs. Builders see enough qualified buyers and renters to justify new starts.
Other regions tell a different story.
Florida’s Atlantic coast has some of the sharpest pullbacks, with Daytona Beach and Jacksonville down as much as 40 percent from last summer. Salt Lake City, after years of brisk building, is cooling as affordability and rates weigh on demand. Large hubs like Atlanta and Washington, D.C., are also issuing fewer permits as developers watch inventory and financing costs.
For these markets, slower permitting may tighten supply further, supporting prices but reducing sales volume and construction activity.
Several forces explain why permits are climbing in some places and falling in others:
Interest rates continue to pressure higher-cost metros, while affordable markets can still support sales at current borrowing levels.
Migration and job growth steer demand toward the South and select Midwestern cities, giving builders confidence. Affordability matters. Regions where entry-level homes remain within reach are better positioned for continued construction.
Supply balance plays a role. Markets that overbuilt during 2020-22 are digesting inventory, while underbuilt areas keep adding stock. Local regulations shape activity. Permitting is easier where approvals are faster and land is available.
Permits are a forward-looking indicator of supply. Markets with rising counts hint at new inventory and potential sales opportunities in the next year. Those with sharp drops may stay undersupplied, keeping competition for existing homes high.
Investors may find value in steady-growth metros where builders remain active despite headwinds. Agents can use permit data to gauge where listings may expand and where tight inventory will continue to favor sellers.
Summer 2025 permit data shows a housing sector in transition. National numbers are soft, yet builders are not retreating everywhere. Affordable metros with population growth and job creation are pressing ahead, while higher-cost or recently overheated markets are regrouping.
For real estate professionals, understanding these local differences is essential. Permits offer an early look at tomorrow’s supply, helping investors and agents align their strategies with the markets that are most likely to deliver opportunity.