John Healey has pledged more than £1bn in additional funding for social and affordable housing as new figures reveal a sharp fall in housebuilding, raising fresh doubts over the government’s target of delivering 1.5m homes.

The funding, due to be confirmed in Wednesday’s Budget, will take the government’s 10-year social and affordable housing programme beyond £40bn, alongside new borrowing powers for councils and regional mayors.

But figures from the National House Building Council (NHBC), released on Monday, show registrations for new homes fell 13 per cent in the third quarter of 2026 compared with a year earlier.

Some 26,231 new homes were registered between July and September, down from 30,279 in the same period last year, as stretched affordability and rising construction costs continued to weigh on the market.

The figures, which track homes registered for warranties before construction, offer a warning about the future supply of housing as ministers seek to accelerate building.

Daniel Pearce, chief strategy officer at NHBC, said the industry had reached a “critical point”.

“Demand remains fragile, affordability is stretched and our latest figures show that the pipeline of new homes is continuing to shrink”, he said.

“Without action to support demand and tackle the barriers to delivery, increasing housing supply will remain extremely challenging”.

Labour’s housing target under pressure

The figures add to growing doubts over whether Labour can meet its pledge to build 1.5 million homes.

“That target was always a stretch target”, Angela Rayner told Sky News on Sunday, pointing to rising construction costs linked to the conflict in the Middle East.

“What we’re trying to do is help the market and help people build the homes that we need. We’ve got far too many people waiting for social housing, and the prime minister, alongside the chancellor, is determined to change that”.

The Treasury said the additional housing funding would help councils replace homes that had been sold and increase the supply of affordable properties.

“For years families have been locked out of a secure and affordable home because we simply haven’t built enough”, a spokesperson said.

“This Budget will go further on that ambition through significant investment in affordable housing and helping councils borrow to build”.

The government will also extend preferential borrowing rates to help councils finance new housing developments.

Meanwhile, mayors and regional leaders will receive an initial £285m in funding next year, alongside plans for a £1.5bn borrowing facility from 2028 to support housing, transport and regeneration projects.

A further £150m will help strategic authorities develop the capacity to manage larger investment programmes.

The Budget is also expected to set out details of the government’s Your First Home scheme, which would allow eligible first-time buyers to purchase new-build properties with a 2.5 per cent deposit, supported by a government equity loan worth 20 per cent of the property’s value.

However, NHBC warned that additional demand-side support would need to be accompanied by planning reform and greater regulatory certainty to encourage developers to increase construction.