1.38 Million Homes Broke Ground in Q1 — Here Is What That Means
1.38 million. That is how many homes broke ground in Q1 2026, according to the Census Bureau and HUD joint report on new residential construction. Seasonally adjusted annual rate, same way we always measure it. And if you have been running crews in this business for any length of time, you know that number tells only half the story.
Here is the deal: single-family is carrying this recovery on its back. The multi-family side is dragging, developers are sitting on their hands, and yet the overall number looks decent because detached homes are selling and breaking ground at a pace we have not seen since mid-2024. Let me walk you through the data, region by region, and explain what it means if you are bidding work right now.
Single-Family Leads at 1.02 Million SAAR
The single-family seasonally adjusted annual rate hit 1.02 million units in Q1 2026, according to Census Bureau HOUST data. That is a 6.3% increase over Q1 2025, and it represents roughly 74% of all housing starts this quarter. Year-over-year, single-family permits rose 5.1% to 992,000 SAAR, signaling that the pipeline has legs through mid-year.
Multi-family starts came in at just 360,000 SAAR, down 14.7% from Q1 2025. The apartment glut in Sun Belt markets — which I will get into later — has frozen a lot of developers in place. According to RealPage, national apartment vacancy rates climbed to 6.8% in March, the highest since 2017.
The permit-to-start ratio for single-family sat at 0.97 in Q1, meaning nearly every permit issued translated into a start within 60 days. That ratio was 0.91 a year ago. Builders are not pulling permits speculatively — they are pulling them because they have buyers or rental demand lined up. That is a healthy signal.
The South Dominates at 54% of All Starts
Regional breakdowns from the Census Bureau tell the same story they have told for the past five years: the South accounts for 54% of all housing starts nationally. That is roughly 745,000 starts annualized, driven by Texas, Florida, Georgia, and the Carolinas.
The West came in second at 22%, or about 304,000 starts SAAR, with Arizona and Nevada posting strong gains. The Midwest held steady at 14%, or 193,000 starts, led by Ohio and Indiana. The Northeast remained the weakest region at 10%, or 138,000 starts, hampered by high land costs, regulatory hurdles, and a limited labor pool.
For crews working in the South, backlogs are running 4.2 months on average, according to the NAHB/Wells Fargo Housing Market Index. That is up from 3.6 months in Q1 2025. If you are not booked through July already, something is off.
Builder Confidence Inches Up to 48
The NAHB/Wells Fargo Housing Market Index — the builder confidence gauge — came in at 48 for March 2026, up from 44 in December 2025. Anything below 50 still means more builders view conditions as poor rather than good, but the trend is positive.
The current sales conditions component hit 52, the first reading above 50 since October 2024. The prospective buyer traffic component lagged at 33, reflecting the affordability crunch that still keeps first-time buyers on the sidelines. According to the National Association of Realtors, the median existing home price hit $398,400 in February 2026.
Expected sales over the next six months scored 55, the highest since June 2024. Builders are feeling cautiously optimistic, especially in the entry-level and build-to-rent segments where demand remains strong. D.R. Horton, the nation is largest homebuilder by volume, reported a 9% increase in net orders for Q1 2026 in their latest earnings call.
Permits Signal More Starts Ahead
Total building permits hit 1.48 million SAAR in March 2026, according to Census Bureau data. That is 3.2% above the Q1 average and suggests starts will hold or increase through Q2. Single-family permits accounted for 992,000 of that total, while multi-family permits came in at 488,000.
Here is the deal about permits: they are a leading indicator, typically by 30 to 90 days. When I see single-family permits running at almost a million, I know there is work coming. The backlog is real. According to the Census Bureau, there were 282,000 single-family homes authorized but not yet started as of March 2026, up 8.4% from a year ago.
For multi-family, the permit numbers are misleading. Yes, 488,000 multi-family permits were issued, but a significant share of those will not break ground for 6 to 12 months due to financing challenges. According to the Mortgage Bankers Association, commercial and multifamily lending fell 22% year-over-year in Q4 2025, and lenders remain cautious heading into 2026.
What Is Driving Single-Family Demand
Three factors are fueling single-family construction right now. First, mortgage rates dropped to 6.4% as of early April, according to Freddie Mac is Primary Mortgage Market Survey. That is down from 7.2% a year ago and has unlocked a segment of buyers who were priced out at higher rates. The monthly payment on a $400,000 mortgage fell roughly $220 per month, according to Bankrate calculations.
Second, the existing home inventory remains painfully tight. According to the National Association of Realtors, there were just 3.1 months of existing home supply in February 2026. The lock-in effect — homeowners refusing to sell because they hold sub-4% mortgages — continues to suppress resale listings. That pushes buyers toward new construction.
Third, migration patterns favor new-build markets. According to U-Haul migration data and Census population estimates, Texas gained 471,000 net new residents in 2025, followed by Florida at 365,000 and North Carolina at 189,000. These are exactly the states where single-family starts are highest.
Material Costs Are Cooperating — For Now
One reason builders are pulling the trigger on new starts is that material costs have stabilized. According to the Bureau of Labor Statistics Producer Price Index, the construction materials index rose just 1.8% year-over-year through February 2026. Compare that to the 13.2% spike in 2021 or the 6.4% increase in 2023.
Lumber prices, the most volatile input, have settled around $480 per thousand board feet according to Random Lengths. That is well below the $1,500 pandemic peak but above the $350 pre-pandemic average. Framing lumber costs approximately $33,000 for a typical 2,400 square-foot home at current prices, according to NAHB cost breakdowns.
Concrete, steel, and gypsum prices have all been relatively flat over the past six months, according to BLS data. The one outlier is electrical equipment, where copper prices remain elevated at $4.20 per pound, pushing wiring and panel costs up 7.3% year-over-year according to the Copper Development Association. If you are running crews on jobs with heavy electrical scope, budget accordingly.
For more on how material prices are affecting builder margins, see our breakdown of material costs squeezing margins in 2026.
Labor Remains the Bottleneck
Every builder I talk to says the same thing: we could start more homes if we had more people. According to the Bureau of Labor Statistics, the construction industry had 410,000 job openings as of February 2026, down from a peak of 480,000 in mid-2023 but still historically elevated.
The unemployment rate in construction was 5.1% in March 2026, according to BLS data — below the 10-year average of 6.2%. Wages for residential construction workers averaged $31.40 per hour, up 4.8% year-over-year, according to the BLS Current Employment Statistics. That is outpacing the 3.1% overall inflation rate, which helps with retention but squeezes margins.
Subcontractor availability varies wildly by trade. Electricians and HVAC technicians are the hardest to book, with lead times of 4 to 6 weeks in hot markets like Dallas-Fort Worth and Phoenix, according to the Associated Builders and Contractors workforce survey. Framers and roofers are slightly easier to find, with 2 to 3 week lead times.
The Build-to-Rent Boom Continues
One segment that does not get enough attention is build-to-rent, or BTR. According to the National Rental Home Council and data from RealPage, approximately 94,000 BTR homes were under construction as of Q1 2026, up 28% from a year ago.
Institutional investors including Invitation Homes, American Homes 4 Rent, and Pretium Partners are funding entire subdivisions of single-family rentals. These homes typically range from 1,200 to 1,800 square feet, three bedrooms, and are built to a mid-grade specification. For GCs and subs, BTR work offers the advantage of volume — a single project might include 80 to 200 homes — with standardized plans that reduce change orders.
According to John Burns Research & Consulting, BTR homes now account for 8.4% of all single-family starts, up from 5.7% in 2023. The hottest BTR markets are Phoenix, Dallas, Atlanta, Charlotte, and Jacksonville, according to Yardi Matrix.
How Q1 2026 Compares to the Past Decade
Let me put this quarter in context. The 10-year average for total housing starts is 1.34 million SAAR, according to Census Bureau historical data. Q1 2026 at 1.38 million is slightly above average — decent but not booming.
The post-pandemic peak was Q1 2022 at 1.79 million SAAR, fueled by rock-bottom mortgage rates and pandemic-driven suburban migration. The recent trough was Q4 2023 at 1.22 million, when mortgage rates briefly touched 8%. We have been clawing back from that trough for the past nine quarters.
For more context on the monthly trend, see our March 2026 housing starts report, which breaks down the most recent month in detail.
What to Watch in Q2 2026
Three things will determine whether starts hold or pull back in Q2. First, mortgage rates. If the Federal Reserve signals additional rate cuts at their May meeting, 30-year fixed rates could dip below 6.2%, according to forecasts from the Mortgage Bankers Association. That would further boost single-family demand.
Second, tariff policy. The Biden administration is 2025 tariffs on Canadian softwood lumber remain in effect at 14.5%, according to the U.S. International Trade Commission. Any escalation would push lumber prices higher and slow starts.
Third, the spring selling season. March and April are historically when builders ramp up, and early indications from the NAHB suggest that new home sales were solid in March. According to the Census Bureau, new single-family home sales hit a seasonally adjusted annual rate of 698,000 in February, up 11.3% year-over-year. If March and April sustain that pace, Q2 starts could push toward 1.42 million SAAR.
The Affordability Gap Remains the Biggest Challenge
Even with improving conditions, affordability remains the central obstacle to a full housing recovery. According to the National Association of Home Builders, only 39.5% of new homes sold in Q4 2025 were affordable to a family earning the national median income of $82,400, based on standard underwriting criteria. That is up from 37.1% in Q4 2024 but well below the 50% to 55% range that prevailed from 2012 to 2019.
The median price of a new single-family home was $412,300 in February 2026, according to Census Bureau data. At 6.4% mortgage rates with 10% down, the monthly principal and interest payment is approximately $2,320. Add property taxes, insurance, and PMI, and the total monthly housing cost exceeds $3,100 in most markets. That requires a household income of roughly $124,000 using the standard 30% debt-to-income threshold.
Builders are responding by shrinking homes. According to the Census Bureau, the median size of a new single-family home fell to 2,180 square feet in 2025, down from 2,299 square feet in 2022. Builders including Meritage Homes and Smith Douglas Homes have launched entire communities of homes under 1,800 square feet, targeting the entry-level price point of $275,000 to $325,000.
Frequently Asked Questions
How many housing starts were there in Q1 2026?
According to Census Bureau HOUST data, total housing starts in Q1 2026 averaged a seasonally adjusted annual rate of 1.38 million units. Single-family starts accounted for 1.02 million, while multi-family starts came in at 360,000. The South led all regions at 54% of total starts.
Is single-family construction growing in 2026?
Yes. Single-family starts rose 6.3% year-over-year in Q1 2026, according to Census Bureau data. Builder confidence has improved with the NAHB Housing Market Index reaching 48 in March. Lower mortgage rates at 6.4%, tight existing home inventory, and strong migration to Sun Belt states are driving demand.
What is the permit-to-start ratio telling us about future construction?
The single-family permit-to-start ratio was 0.97 in Q1 2026, up from 0.91 a year ago, according to Census Bureau data. This means nearly every permit issued is converting to a start within 60 days, indicating strong builder conviction. Total building permits hit 1.48 million SAAR in March, suggesting starts will hold or increase through Q2 2026.
Your Action Item for This Week
If you are a GC or sub running residential crews, pull your local permit data for Q1. Compare it to your current backlog. If your local permits are up year-over-year but your backlog is flat or shrinking, you are losing market share and need to adjust your bidding strategy. The Census Bureau publishes permit data by metropolitan statistical area at census.gov — use it. The work is out there. Go get it.
