Citing new data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, the National Association of Home Builder reported housing starts fell sharply in May, driven by a steep drop in multifamily construction.
Single-family building, meanwhile, 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.
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, the National Association of Home Builders said. Within that 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, including apartment buildings and condos, decreased 40.2% to an annualized 295,000 pace and are down 14.2% compared to May 2025.
Builder Sentiment Weakened
“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.”
Jing Fu, NAHB’s Senior Director of Forecasting and Analysis, noted the sector still faces challenges.
“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.”
On a regional and year-to-date basis, NAHB noted that 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 Fall
Overall permits fell 0.7% to a 1.41-million-unit annualized rate in May, NAHB noted. Single-family permits rose 0.6% to an 886,000-unit rate and are down 1.8% compared to May 2025. Multifamily permits fell 2.8% to an annualized 527,000 pace and are up 2.5% compared to May 2025.
When looking at regional permit data on a year-to-date basis, NAHB noted that 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 report said that the number of single-family homes under construction is at 587,000 units—5.9% lower than a year ago.
