Single-family construction faces pressure amid shifting market trends

Single-family home construction faced continued pressure in the second quarter of 2026, driven by high interest rates, rising material costs, and economic uncertainty. According to the National Association of Home Builders (NAHB), construction in large metro urban core counties saw a 13.9% decline, marking the fifth consecutive quarterly drop.

In contrast, multifamily construction strengthened in most regions due to rental housing demand. While single-family growth remains negative, the rate of decline has improved in most geographic categories. Builders are increasingly shifting toward smaller metro areas where land is more affordable and available.

Data from the Federal Deposit Insurance Corporation (FDIC) shows that single-family construction lending fell slightly by 0.4% in the second quarter, reaching $91.3 billion. Despite this quarterly dip, the volume of 1-4 family residential loans is up 1.7% compared to the previous year. Total outstanding construction and development (AD&C) loans rose to $453.5 billion, the first increase in nine quarters.