SAN GABRIEL VALLEY — Housing construction slows as California continues pushing for more homes, highlighting the financial pressures facing builders and housing developers.
Private residential construction spending fell 1.3% in July from the previous month, according to the U.S. Census Bureau. Residential spending reached a seasonally adjusted annual rate of $859 billion.
The slowdown extended beyond housing. Total U.S. construction spending fell 0.5% from June and 3.8% from July 2025. The Census Bureau released the latest figures Sept. 1.
The numbers measure construction nationally, not activity specifically in California or the San Gabriel Valley. Still, they provide another measure of the economic conditions facing housing development.
The Census Bureau also reported that housing starts fell sharply in July. Privately owned housing starts dropped 12.4% from June and 13.5% from July 2025. Single-family starts declined 9.9% for the month.
Housing Construction Slows Amid Housing Need
California has spent years trying to increase housing production as high costs and limited supply strain households.
The California Department of Housing and Community Development describes the state’s housing shortage as decades in the making. State officials have responded with changes intended to streamline development and reduce construction costs.
California housing officials outline recent efforts to accelerate housing production.
Yet getting a project approved is only part of building new housing.
Developers must also finance land acquisition, construction, labor and materials before completing a project. Higher borrowing costs increase those expenses and can make financing more difficult.
California housing officials recognize financing availability, land prices and construction costs as factors that can constrain housing development.
That matters in communities such as El Monte, Baldwin Park and Rosemead, where adding housing often involves developing within established neighborhoods rather than creating large new subdivisions.
Fewer Projects Can Tighten Future Supply
The effect of slower construction does not appear immediately in the housing market. A project delayed today represents homes that may not reach buyers or renters months or years later.
July’s housing-start figures illustrate that pipeline. Single-family starts ran at a seasonally adjusted annual rate of 808,000 nationwide, down from 897,000 in June.
Multifamily construction also slowed. Housing starts in buildings with five units or more reached an annual rate of 421,000 in July, according to the Census Bureau.
Those figures do not establish that interest rates caused July’s decline. Construction decisions also reflect land prices, labor and material costs, demand, permitting and other factors.
Financing costs remain one part of that calculation. When borrowing becomes more expensive, developers face higher costs before a home reaches the market.
For the San Gabriel Valley, that tension carries local consequences. California wants more housing, while the economics of producing it remain difficult.
Slower construction today can mean fewer homes entering an already constrained housing market tomorrow.
