Summer 2025 Construction Insurance Forecast

Each quarter, US Assure President Alan Ferguson joins us in the studio to discuss key factors contributing to changes in the construction industry, a forecast for the coming months, and how it will impact your business opportunities.

Read the Video Transcript:

Welcome to the Builders Risk Outlook.

Lately, a mix of global uncertainty, stubborn inflation, tariff questions and mortgage rates that just won’t budge have combined to slow down the residential construction market.

Some say it has even stalled.

Since the pandemic, we’ve seen a few highs and lows for residential construction, including:

• A sharp rise in home prices
• A shortage of resale inventory
• Persistently high mortgage rates
• A bump in residential and multifamily construction

Adding more fuel to the environment, demand also outpaced supply following the pandemic. This drove prices up fast and promoted inflation. 

To slow down price increases, the Fed responded by raising rates – which has since held a lot of buyers back and built supply up.

In fact, it has created a market where we have over 1.5 million homes for sale today - the highest inventory since 2019.

At the halfway point of 2025, slight shifts suggest improvements are finally on the horizon for single family housing. 

With more homes available, price appreciation is declining. And, despite undesirable mortgage rates for consumers, new home sales are growing.

In April, 17% of all single-family sales were new homes - the highest share in nearly 20 years. It is important to note that the inventory of new homes for sale is at levels not seen since 2007. Ongoing builder price cuts and incentives should help move this excess inventory.

Meanwhile, multifamily construction is normalizing – especially apartments. I’ve talked before about overbuilding and supply chain delays in this space. Yet, as those units have come online, we are seeing a modest uptick in multifamily starts.

The Bottom Line

New home construction is slow to grow, and builder confidence reflects it. It appears 2025 will fall short of prior promising projections unless some changes happen.

A bump in the residential market during the second half of 2025 is still possible IF we get clarity on tariffs, interest rates drop, and inflation continues to improve.

See you next time.

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