The US housing market is showing signs of improvement on the supply side, with new residential construction reaching its highest level in 15 years. Housing starts hit an annualized rate of 1.65 million units in March, up 12% from the same period in 2025.
The inventory of homes for sale has increased to 4.2 months of supply, still below the 6-month level considered balanced but significantly improved from the record low of 1.6 months in 2022. More sellers are listing their homes as the "lock-in" effect from ultra-low pandemic-era mortgages gradually fades.
New construction is led by single-family homes, which account for 70% of starts. Builders are focusing on starter homes and affordable price points, responding to strong demand from first-time buyers. The average new home size has decreased for the third consecutive year as builders prioritize affordability.
Geographic trends show the strongest construction activity in the Sun Belt states, particularly Texas, Florida, Georgia, and the Carolinas. These areas benefit from lower land costs, favorable regulations, and strong population growth.
Despite the improvement, housing analysts say the market remains undersupplied by approximately 4 million units relative to demand. Closing this gap will require sustained construction activity at elevated levels for several more years.
