Construction of new single-family homes across the U.S. stalled in June as builders continued pulling back due to high mortgage rates, but the multi-family sector roared back to life, the U.S. Census Bureau reported on Friday.
Single-family housing starts last month were at a seasonally adjusted annual rate of 895,000, down 0.2% from May and 3.2% less than a year ago—a pullback attributed to elevated construction financing costs and weakening buyer demand.
However, total private-owned housing starts surged 19% month over month and 3.5% year over year to 1,427,000, driven up by a staggering jump in multi-family construction.
According to the federal agency, the monthly rate for units in buildings with five units or more was 513,000, up 76% from May's 295,000 pace, which was the lowest level in over a year.
Meanwhile, 1,367,000 residential building permits were issued nationwide in June, down 3% from May and 2.3% below the June 2025 pace.
Single-family permits dipped 2.4% month over month, with 871,000 authorizations granted.
It follows Thursday's release of the latest National Association of Home Builders/Wells Fargo Housing Market Index, which showed that homebuilder confidence in the market for newly built single-family homes dropped to 34 this month, down from a revised 36 in June. Any reading below 50 reflects negative sentiment about the market.
"Builders continue to face a difficult cost environment," says Danushka Nanayakkara-Skillington, National Association of Home Builders' assistant vice president for forecasting and analysis. "Higher long-term Treasury yields have kept mortgage rates elevated, while rising building material prices, transportation costs and insurance expenses are making new construction more expensive. The monthly decline underscores the ongoing challenges facing residential construction despite a persistent shortage of available homes."
The recently passed 21st Century ROAD to Housing Act, which became law last week, was designed to incentivize new construction to ease the supply crisis, but industry experts say it will not happen overnight.
"The newly enacted housing bill includes key provisions to help builders increase supply, including streamlined regulations and incentives for local zoning reforms, but it will take time for these measures to take effect," says NAHB Chairman Bill Owens.
However, in welcome news for homebuyers, June saw total private housing completions rise 3.3% from a month ago and 1.5% compared to last year to 1,392,000.
Single-family completions performed even better, jumping 6.6% from May to a rate of 964,000.
Regionally, the gains in completions were concentrated in the Northeast and the South, but characterized by the delivery of different kinds of inventory. The Northeast saw completions rise 18.7% year over year, but single-family home completions actually fell by 2.9%, suggesting that multi-family projects are primarily what’s hitting the market there, according to Realtor.com® senior economist Jake Krimmel.
The South saw overall completions rise by 5% year over year, but single-family completions grew by 15.8%, suggesting a slowdown in multi-family projects.
"The strength of the South’s single family segment is notable because sales of new single-family homes in that region have been in decline," says Krimmel. "Sales have been stronger in the Northeast and Midwest, where inventory is still constrained and new homes are needed the most, but completions of single-family homes in both these regions fell on a year over year basis."
The economist points out that for home shoppers, now is a great time to purchase a new-construction home, especially in Southern markets where the inventory continues to expand and builders are offering price cuts and incentives.
"In the long run, though, these tepid permitting readouts do not inspire confidence in the country’s ability to close the 4 million home supply gap," warns Krimmel. "Without meaningful acceleration to homebuilding, the high prices and limited options that plague buyers in many markets today will continue."
Snejana Farberov is a reporter at Realtor.com covering the U.S. housing market and the latest domestic real estate trends. She has worked as a general assignment journalist in New York City and Long Island for 16 years, writing for New York Post, Daily Mail, and News 12. Snejana earned bachelor's degrees in journalism and Italian from St. John's University, followed by a master’s degree from Columbia University School of Journalism.
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