U.S. housing starts posted a significant decline in May, driven largely by a sharp pullback in multifamily construction activity. Higher interest rates, rising construction costs, affordability challenges, and ongoing labor shortages continue to weigh on residential development.
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, overall housing starts fell 15.4% in May to a seasonally adjusted annual rate of 1.18 million units.
Single-family construction declined 1.9% to an annualized rate of 882,000 units, marking a 6.7% decrease compared to May 2025. The multifamily sector, which includes apartments and condominiums, experienced a much steeper decline, dropping 40.2% to an annualized rate of 295,000 units, down 14.2% year-over-year.
“The decline in housing starts aligns with NAHB’s latest builder survey, which showed builder sentiment weakening further in June,” said Bill Owens, chairman of the National Association of Home Builders (NAHB) and a home builder and remodeler from Worthington, Ohio. “Elevated mortgage rates, affordability challenges and cautious buyers continue to weigh on demand for new homes. Builders are offering incentives and cutting prices, but difficult market conditions are still limiting sustained momentum for new construction.”
NAHB Senior Director of Forecasting and Analysis Jing Fu noted that both starts and permit activity reflect continued uncertainty in the housing market.
“Year-to-date declines in single-family housing starts and permits underscore the continued challenges in the housing market,” Fu said. “While the Midwest has shown some resilience, lower permit activity indicates builders remain cautious about future construction amid economic uncertainty and affordability pressures.”
Regional data showed mixed performance. On a year-to-date basis, combined single-family and multifamily housing starts were up 17.5% in the Northeast but declined 4.1% in the Midwest, 1.6% in the South, and 4.9% in the West.
Permit activity also softened in May. Overall permits fell 0.7% to an annualized rate of 1.41 million units. Single-family permits edged up 0.6% to 886,000 units but remained 1.8% below year-ago levels. Multifamily permits declined 2.8% to an annualized rate of 527,000 units, though they remained 2.5% higher than May 2025.
Regionally, year-to-date permit activity increased 10% in the Northeast, 2.4% in the Midwest, and 0.1% in the West, while the South posted a 6.7% decline.
Meanwhile, the number of single-family homes currently under construction fell to 587,000 units, down 5.9% from a year ago, reflecting the ongoing slowdown in residential building activity.
