Just over 3,100 building permits for single-family houses and townhome units are expected to be issued in the Greater Des Moines area in 2025, the fewest since 2021, data from the Home Builders Association of Greater Des Moines shows.

Several factors have contributed to the decrease including high interest rates and the continuing escalation of material costs, both of which have kept potential homebuyers sidelined. Another factor has been a dwindling supply of lots on which to build single-family houses and townhomes.  

However, homebuilders are optimistic that 2026 will bring an uptick in new construction, particularly in communities where the installation of new roads and sewers has opened developable land.

“Most of the builders I’m talking to seem to be cautiously optimistic that things are going to start to uptick next year,” said Chris Pickard, owner of Sage Homes and president of the Home Builders Association of Greater Des Moines.

In 2021, building permits were issued for the construction of 4,746 single-family houses and townhomes by Polk County and the 20 Central Iowa cities the association collects data from, including Ames, Des Moines, Grimes, Urbandale, Waukee and West Des Moines. In 2024, 3,434 permits were issued by the communities, a 27.6% decrease from 2021. The communities issued 2,624 permits through October and are on pace to issue a little over 3,100 for the remainder of the year.

One of the reasons for the drop in the permits for new home construction is a slowdown in speculative home construction, Pickard said. “Everyone has kind of peeled back the speculative piece. I thought [Sage Homes] would build more spec houses this year but in June it became fairly apparent that sales weren’t what we expected them to be, so we pulled back our activity for the rest of the year. I think we’ve put in half of what we originally intended.”

In 2024, DR Horton, which bills itself as “America’s largest homebuilder,” took out building permits for the construction of 912 single-family houses and townhomes, the most of any Des Moines-area building, association data shows. Through October, the builder had taken out 462 building permits.

“DR Horton predominantly builds spec houses, and they are way down,” Pickard said.

Grimes is among the communities that has experienced a slowdown in residential construction. In 2021, the community issued 209 building permits for single-family houses and townhomes, association data shows. In 2022, the number of single-family building permits issued in Grimes plummeted to 78; in 2023, 94 permits were issued; and in 2024, 98. The community is on track to issue just over 100 residential permits in 2025.

“Grimes has not been immune to any of the slowdown that’s occurred the past couple of years,” said Alex Pfaltzgraff, Grimes’ assistant city manager and development services director. “I think the macroeconomic factors of high interest rates and construction costs are obviously a piece of the puzzle but I think more importantly was our lot inventory. We have just not been able to keep a steady flow of new inventory coming in.”

When new single-family plats gained approval, the lots were quickly snatched up by home builders, Pfaltzgraff said. In 2022, the city began planning sanitary sewer and water line extensions to the 19th Street corridor. As the projects were completed, property owners started selling land to developers, who in turn made other infrastructure improvements.

Hope Development & Realty, Hubbell Realty Co. and Temple Real Estate Services have submitted new plats for single-family homes and building permits have started being issued for plats that have received city approval, Pfaltzgraff said.

“I think we will issue more [residential] permits in the last quarter of 2025 than we did all of the rest of the year combined,” Pfaltzgraff said. “We’re sitting on a much healthier inventory of lots that will allow us to where Grimes has been historically in terms of single-family construction.”

West Des Moines also experienced a slowdown in new residential construction but officials there also expect to see a turnaround in 2026, mostly because of new areas opening up for development. In 2022, the city issued 438 building permits for new houses and townhomes, association data shows. In 2024, 237 permits were issued and the city is on track to issue about 290 residential permits this year.

The city is in the process of approving residential plats for an area south of Iowa Highway 5 in the southeast section of West Des Moines, said Dennis Patrick, the city’s chief building official. “A couple of the large plats going through – one has about 300 lots and the other about 200. It’s been a number of years since we’ve had developments that go on. From that standpoint, I think we’ll see an uptick in [home construction] but I don’t think it’s going to be a huge jump.”

Kalen Ludwig, a new construction specialist with Peoples Co. and a partner in Ground Breaker Homes, also is optimistic about an uptick in new home construction in 2026. Over 4,500 homes were listed for sale in October in Greater Des Moines, nearly 15% more than in October 2024, according to data from the Des Moines Area Association of Realtors.

“People are starting to say ‘What am I waiting for? I can’t live in this house forever,’” Ludwig said. “I think people are realizing that interest rates aren’t going to return to where they were a few years ago and if they do, they can refinance. It just feels like people are slowly jumping back in and those who are in older homes are wanting to build new.”

Many people interested in buying new homes want one that is custom built rather than one that is part of a builders’ package of speculative houses, Ludwig said. “I think it’s the custom market that has a lot of builders feeling like things are strong and going well.”

Read more about the Des Moines area housing market from our Project515 on housing.