I want to walk you through something important that Zillow Research just reported about the national housing picture, because it's shaping what we're seeing here locally too. Single-family housing starts actually picked up in August, jumping to a pretty solid pace, but here's the catch: year to date, we're still running behind where we were last year. The momentum we saw in August is likely a blip rather than a real turnaround for the rest of the year.
According to Zillow's data, what's really pressuring the market right now is that there's just more inventory available to buyers than there was a year ago. We're seeing both more homes on the market overall and more fresh new listings coming up for sale each month. Combined with mortgage rates staying elevated and economic uncertainty making buyers cautious, it's creating stiff competition for homebuilders who are trying to move product.
The builders are responding to these headwinds by pumping the brakes. Single-family completions actually fell in August to the lowest level we've seen since early 2019, which tells you something significant about the pipeline. Building permits are declining too, and when permits drop, you know completions are going to slow down even more in the months ahead.
What's interesting is that this slowdown in permits is hitting hardest in the metros that had been the hottest for new construction, like San Antonio, Austin, and Baltimore. The broader housing picture shows we're still running below where we were before the pandemic in terms of permitting activity.
The underlying pressures on builders aren't going away anytime soon. Mortgage rates are expected to stay where they are or higher through the end of the year. You're also looking at persistent concerns about material costs staying elevated and the ongoing challenge of finding skilled labor, all of which are weighing on builder sentiment.
What I'm seeing locally here in the Bay Area and the East Bay is that this national cooling in new construction actually creates a different dynamic for our market. With fewer new homes being built across the country and that massive housing shortage still looming, the existing homes we do have become even more valuable. For sellers, this could mean more staying power in your pricing. For buyers, it means competition for resale homes probably isn't going away, even as the new home market softens nationally.
