US housing starts fell 2.6% from July to a seasonally adjusted annual rate of 1.275 million units in August 2026, missing economists' forecasts of 1.31 million to 1.32 million and extending a sharp slowdown after July's 12.4% decline. The drop was driven by multifamily construction: starts on buildings with five or more units plunged 22.5% to 344,000 units, while single-family starts rose 7.6% to 918,000. Building permits, a forward-looking measure of construction, declined 2.7% to 1.394 million, although they were up 3.5% from August 2025. Completions fell 11.9% to 1.128 million units, down 27.1% year over year. Elevated mortgage rates, financing costs, materials, labor and land expenses are weighing on developers and homebuyers, while builder sentiment has deteriorated. The Federal Reserve previously raised its benchmark rate to 3.75%-4.00%, and the average 30-year fixed mortgage rate reached 6.76%.