New construction at the midpoint of 2026 highlights the tension between Americans looking for affordable housing and market dynamics hampered by financial volatility and regulatory constraints. While population growth is slowing, the pace of household formation remains broadly in line with historical averages. This is an important trend for builders as it offers a clear measure of potential demand which is mirrored by the pace of construction. The key takeaway is that in 2026, a significant share of households is still seeking affordable homes.
On the supply side, however, a volatile mix of geopolitical instability and trade tariffs is driving global trade costs higher, keeping the price of a finished home near historic highs. Based on the latest Census data, the median price of a new home sold in May 2026 was $424,900.
Permits declined 3.0% from May, driven by declines in both single-family and multifamily units. Permits were 2.3% below last year’s numbers. However, housing starts jumped 19.0% from the prior month to 1.43 million annualized units, driven by a surge in multifamily projects, up by double-digits. Starts were 3.5% higher than a year ago, boosted by a 19.3% jump in buildings with five or more units. Completed homes, ready for sale, increased 3.3% from May 2026, and were 1.5% above June 2025. The pace of completions was influenced by gains in the Northeast and South.
Compounding the market challenge are the myriad federal, state and local regulations which add close to $132,000 to the cost of a new single-family home, about 26% of the average sales price. Not surprisingly, the affordable, entry-level home, which was a fixture of the American housing landscape for over half a century is a near-extinct product.
The recently enacted 21st Century ROAD to Housing Act is a welcome development for housing, bringing the promise of streamlined regulations, lower barriers to construction and smoother financing for housing projects. Whether it’s recognizing that modern manufactured housing has evolved from its mobile inception and can be liberated from its steel rolling chassis or acknowledging that built-to-rent single-family rental properties provide an affordable and welcome home for many families, the Act opens the way for more construction. At the end of the day, the primary solution to today’s lack of affordable housing is simple: more affordable new homes.