Residential construction downturn accelerates
Construction of residential homes is shrinking at an accelerated clip.
Due to the ongoing government shutdown, official housing starts data was not released last week, leaving the industry to rely on alternative sources. The latest data from ConstructConnect shows that new single-family construction remained in a deep slump in September, down 10.3% year to date, which is only a slight improvement from the 11.1% decline in the second quarter.
September’s figures reinforce the story. Residential housing starts for the month slipped nearly 20% compared to the same time last year, and they are down 4% from August.
The biggest drag was multifamily, which had been a bright spot but is now contracting. Apartment and condo construction dropped 6.1% in September due to weak monthly spending.
Meanwhile, the job picture for construction looks bleak. For September, the Bureau of Labor Statistics was unable to publish official job data due to the shutdown; however, private sector data suggests a continued slowdown in the labor market and weak hiring across the industry.
Homebuilders see softening demand and rising cancellations
Top national homebuilders saw a decline in earnings in the third quarter of 2025, with fewer contracts closing and more being cancelled.
Virginia-based NVR Inc. — the parent company of Ryan Homes, NV Homes and Heartland Homes — reported revenues of $2.61 billion for the quarter, down roughly 4% from the same period last year.
The average sales price for new orders was up 3% year over year to $464,800, but the number of new orders, 4,735 units, was down 16%, according to the company’s quarterly earnings report.
Taylor Morrison saw a similar cooling in the market, its third-quarter report said. The Arizona-based firm reported a 1.2% drop in revenue from the previous year, to $2.1 billion.
Home closings were down 2% from the same time in 2024, to 3,324 units. The average price, however, was up 1% to $602,000.
Contract cancellations saw significant jumps at both companies. Taylor Morrison had a 66% year-over-year increase in canceled contracts, with 15.4% of buyers opting out before settlement. NVR rose from 15% of contracts cancelled in the third quarter of 2024 to 19% in the same period this year.
The number of homes for sale also appears to have fallen sharply, with a 19% drop in unsold units for NVR and a 36.7% decline for Taylor Morrison.
Rising prices, along with a rise in canceled contracts, point to softening demand in the market, possibly connected to affordability issues for homebuyers. Taylor Morrison CEO and Chair Sheryl Palmer said the company is using incentives to get people into homes, especially first-time buyers.
“Appreciating the market's current dynamics, we are focused on deploying innovative and compelling incentives and pricing offers to drive buyer confidence and improve affordability, leaning into the appeal of our well-designed spec and to-be-built home offerings to meet consumer preferences, and carefully managing new starts as we continue to right-size inventory and prepare for next year's spring selling season,” Palmer said in the report.