Construction activity on new single-family homes retreated in May alongside permits and completions in the face of economic uncertainty, high borrowing costs, and material rates, the U.S. Census Bureau reported Tuesday.
Single-family housing starts last month were a seasonally adjusted annual rate of 882,000, down 1.9% from April and 6.7% compared to a year ago.
Total housing starts in May also experienced a significant pullback, plunging 15.4% month over month and 8.7% year over year to a seasonally adjusted annual rate of 1.17 million units, driven by a sharp decline in the multifamily sector.
Municipalities across the U.S. issued 1.413 million permits for the construction of private housing in May, 0.7% below April's rate of 1.42 million and 0.2% below May 2025's 1.416 million.
"Year-to-date declines in single-family housing starts and permits underscore the continued challenges in the housing market," says Jing Fu, senior director of forecasting and analysis at the National Association of Home Builders (NAHB). "While the Midwest has shown some resilience, lower permit activity indicates builders remain cautious about future construction amid economic uncertainty and affordability pressures."
Single-family completions last month dipped 1.6% below April's revised rate of 886,000 units, while total housing completions dropped 8.1% from April.
Experts agree that high interest rates, rising construction costs, and labor shortages are holding back permitting and building activity in multifamily and single-family sectors.
The latest data from the Census Bureau aligns with NAHB's June builder survey, which showed builder sentiment weakening.
"Elevated mortgage rates, affordability challenges and cautious buyers continue to weigh on demand for new homes," says NAHB Chairman Bill Owens. "Builders are offering incentives and cutting prices, but difficult market conditions are still limiting sustained momentum for new construction."
On a regional basis, combined single-family and multifamily starts were 17.5% higher than a year ago in the Northeast, 4.1% lower in the Midwest, 1.6% lower in the South, and 4.9% lower in the West.
Meanwhile, permits were up 10% year over year in the Northeast, 2.4% higher in the Midwest, down 6.7% in the South, and up 0.1% in the West.
This is a developing story. Please check back for updates.
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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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