Single-family construction activity slumped last month after a half-hearted rebound in August, the U.S. Census Bureau reported Tuesday.

The seasonally adjusted annual pace of single-family housing starts declined 4% on a monthly basis in September, though starts were up 2.6% from year-ago levels. That put starts approximately 4% off last year’s pace year to date.

Single-family starts were up 4.3% over the month in the Northeast while declining nearly 14% in the Midwest and more than 3% in the South and West.

Sluggish sales of newly constructed homes are a primary driver of slowing single-family construction activity, which is on pace to contract in 2026 for the third straight year.

Meanwhile, the National Association of Home Builders reported earlier this week that sales sentiment among its members fell to a 14-year low in October. The Mortgage Bankers Association said last week that demand for new-home purchase loans plunged sharply in September amid a run-up in borrowing costs.

Years of higher financing costs, slow sales and margin pressures have kept builder optimism in negative territory since early 2024, translating to a yearslong pullback in overall activity and more aggressive use of sales incentives and price cuts on new homes.

Single-family permitting hit its slowest pace of the year in September, according to the Census Bureau, declining 4% from August to a seasonally adjusted annual rate of 845,000 units and reflecting a 2.8% contraction year to date.

Overall completions, however, have lagged other single-family indicators.

The annual pace of completed single-family homes fell 2.4% over the month in September and 11% from a year ago, landing 10.8% lower year to date.

With typical 30-year mortgage rates still averaging well above 7% — and expected to remain that way in 2027 — the chief economist of the NAHB recently forecast single-family construction activity would decline once again next year.

Year-to-date single-family completions are down almost 13% in the Northeast, nearly 11% in the South and more than 16% in the West, while being 0.8% higher in the Midwest.