May Housing Starts Fall as Multifamily Construction Slows Sharply

Housing starts fell sharply in May, driven by a steep drop in multifamily construction, while single-family building also slipped amid high interest rates, rising construction costs and persistent labor shortages.

Overall housing starts decreased 15.4% in May to a seasonally adjusted annual rate of 1.18 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The May reading of 1.18 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 1.9% to an 882,000 seasonally adjusted annual rate and are down 6.7% compared to May 2025. The multifamily sector, which includes apartment buildings and condos, decreased 40.2% to an annualized 295,000 pace and are down 14.2% compared to May 2025.

"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."

"Year-to-date declines in single-family housing starts and permits underscore the continued challenges in the housing market," said Jing Fu, NAHB's senior director of forecasting and analysis. "While the Midwest has shown some resilience, lower permit activity indicates builders remain cautious about future construction amid economic uncertainty and affordability pressures."

On a regional and year-to-date basis, combined single-family and multifamily starts were 17.5% higher in the Northeast, 4.1% lower in the Midwest, 1.6% lower in the South and 4.9% lower in the West.

Overall permits decreased 0.7% to a 1.41-million-unit annualized rate in May. Single-family permits increased 0.6% to an 886,000-unit rate and are down 1.8% compared to May 2025. Multifamily permits decreased 2.8% to an annualized 527,000 pace and are up 2.5% compared to May 2025.

Looking at regional permit data on a year-to-date basis, permits were 10% higher in the Northeast, 2.4% higher in the Midwest, 6.7% lower in the South and 0.1% higher in the West.

The number of single-family homes under construction is at 587,000 units-5.9% lower than a year ago.