Housing starts in the United States fell to their lowest level since 2020 as builders grapple with high construction costs and weak demand, while consumers wrestle with elevated mortgage rates and affordability.
Total housing starts, which include single-family homes, apartments, and condominiums, declined by 15.4 percent from April to May to a seasonally adjusted annual rate of 1.18 million housing units, a Census Bureau and Department of Housing and Urban Development report stated on June 16. May’s overall housing starts were 8.7 percent lower than the same month in 2025, with single-family home starts decreasing 1.9 percent from April.
The decline in the total number of new starts was led by a steep dip in new multifamily construction, which tumbled 40.2 percent month over month to a seasonally adjusted pace of 295,000 units for buildings that have five or more apartments. Multifamily starts were down by 14.2 percent year over year.
Real estate data firm CoStar reported in May that a glut of new apartment inventory and declining rental rates across high-growth metropolitan markets in the Sun Belt were the primary factors driving multifamily starts lower.
New building permits for future housing construction also declined by 0.7 percent in May to an annualized rate of 1.41 million units, the Census Bureau data show.
“Year-to-date declines in single-family housing starts and permits underscore the continued challenges in the housing market,” said Jing Fu, senior director of forecasting and analysis for the National Association of Home Builders (NAHB).
“Lower permit activity indicates builders remain cautious about future construction amid economic uncertainty and affordability pressures.”
Builder sentiment, a gauge of homebuilder confidence about current and future home sales, slipped two points in June to a score of 35, according to the monthly NAHB/Wells Fargo Housing Market Index released on June 15. More than a third of homebuilders slashed prices in June by an average of 6 percent to spur new home sales as builder sentiment continues to wane.
Builder sentiment has been below 40 (a score of 50 indicates a positive outlook) for 14 consecutive months, a pessimistic streak last seen during the peak of the housing foreclosure crisis in 2011–2012, the NAHB reported.
“Easing geopolitical tensions may allow mortgage rates to start falling again, further unlocking sidelined buyers who have been waiting to enter the new and existing home markets,” Bankrate Financial Analyst Stephen Kates said in a note sent to The Epoch Times.
“The housing market’s strength depends heavily on location. Metropolitan areas that continued building throughout the 2020s have rising inventories and flat or falling home prices. Strong post-pandemic buyer demand has waned under high mortgage rates and economic uncertainty.”
The Federal Reserve is not expected to cut its rate in the remainder of 2026, reducing the likelihood of near-term relief on mortgage rates for homeowners. Builders, meanwhile, continue to face pressure from high construction input costs, which increased by 2.6 percent in May and are up by almost 10 percent year over year, Associated Builders and Contractors (ABC) reported on June 11. Overall construction input costs are up 55.5 percent since February of 2020, ABC added.
