What Slower Single-Family Starts Mean for South Bay Real Estate in 2025

April’s report from the National Association of Home Builders (NAHB) reveals a mixed message. New construction is growing, but only in some segments. If you’re buying, selling, or investing in the South Bay or Greater Los Angeles, here’s what this means for you.

Multifamily builds rose, but single-family construction dropped

Housing starts rose 1.6% in April, reaching an annual rate of 1.361 million units. However, most of that growth came from multifamily housing, like apartment buildings and condos.

Meanwhile, single-family home starts fell 2.1%, dropping to 927,000 units. This matters because single-family homes remain the most desired option in suburban and coastal neighborhoods like Manhattan Beach, Redondo Beach, Hermosa Beach, and Palos Verdes.

Why the shift? Developers are focusing on higher-density options. This trend reflects affordability challenges, high land prices, and space limitations, especially in popular Southern California markets.

Building Permits Are Down—And That’s a Warning Sign

In April, building permits dropped 4.7%. This is important because permits are a forward-looking indicator. Fewer permits today mean fewer homes tomorrow.

This decline could lead to even tighter inventory in already competitive areas like the South Bay. If demand holds steady or increases, home prices could feel more upward pressure.

Other Market Pressures: Interest Rates, Fires, and Tariffs

The market isn’t just reacting to construction data. Several external factors are also creating uncertainty:

• Interest rates remain elevated, keeping monthly payments high and affecting buyer affordability.

• Recent wildfires across Southern California have disrupted construction timelines and increased insurance premiums.

• Ongoing tariff concerns and supply chain issues could push construction costs even higher. That adds risk for builders and impacts future housing availability.

What to Expect Going Forward in South Bay Real Estate

1. Inventory Is Slowly Rising

• We’re seeing an increase in homes for sale across South Bay cities like  Manhattan Beach, Redondo Beach, Torrance, and Palos Verdes.

• While inventory is still limited compared to pre-pandemic levels, this uptick gives buyers more choices.

2. Homes Are Taking Longer to Sell

• Days on market are creeping up.

• This shift is subtle but important—sellers may need to be more flexible, especially if their home isn’t priced right or move-in ready.

3. More Room for Negotiation

• For buyers, this presents a unique window of opportunity.

• You may be able to negotiate better terms, ask for repairs or credits, or even avoid bidding wars.

• Pre-approval and a smart offer strategy still matter, but the dynamic is shifting slightly in your favor.

4. Prices Are Holding, But Momentum Is Easing

• High interest rates continue to keep prices stable, but not surging.

• The fear of missing out (FOMO) has cooled, and cautious buyers are starting to re-enter the market with more leverage.

5. Sellers Must Adjust Their Strategy

• Proper pricing and strong presentation are more important than ever.

• Homes that stand out—either through design, location, or value—will still move quickly.

• Overpriced listings, however, may sit longer or require price reductions.

6. Still Watching: Interest Rates, Construction Costs, and Insurance

• Higher borrowing costs and recent fires continue to affect timelines and buyer confidence.

• Tariffs and global supply issues could push construction prices up again, making resale homes even more appealing in the near future.

Local Insight: South Bay Resale Market Still Strong

Even with higher borrowing costs, home prices in the South Bay remain resilient. Limited single-family supply is keeping values steady, especially in sought-after coastal communities.

Because there are fewer new homes, resale listings are more important than ever. That’s why I stay focused on uncovering off-market opportunities and prepping listings that shine.

Let’s Talk Strategy

The market is shifting. Whether you’re planning to buy, sell, or invest, it helps to have someone who understands how construction trends, economic factors, and local dynamics affect your next move.

📩 Ready to talk real estate in the South Bay or Greater Los Angeles? Let’s connect.

Sources:  Single-Family Starts Down on Economic and Tariff Uncertainty (NAHB) ,  Building Permits by State and Metro Area (NAHB)