US Single Family Housing Starts Fall 12 Percent Annually: Census

Rising construction costs and high interest rates are making it difficult for builders to deliver affordable homes.

A home advertised for sale in a residential neighborhood in San Jose, Calif., on Aug. 15, 2024. Loren Elliott/Getty Images

Single-family housing starts and building permits issued declined on a monthly and annual basis across the United States in April, the Census Bureau said in a May 16 statement.

Housing starts fell by 2.1 percent from March and were down 12 percent from 2024. Meanwhile, building permit authorizations fell 5.1 percent month-over-month and were down by 6.2 percent annually.

“The decline in single-family housing starts in April mirrors builder sentiment, as elevated interest rates, uncertainty on the tariff front, and rising construction costs are exacerbating housing affordability challenges,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB), according to a May 16 statement from the group.

“In turn, this is making it more difficult for builders to deliver entry-level housing at a price point that is accessible to home buyers.”

Data from Freddie Mac shows the weekly average rate of 30-year fixed-rate mortgage has ranged between roughly 6.5 and 7 percent since January, likely pushing many prospective buyers away from the housing market.

Associated Builders and Contractors (ABC) said in a May 13 statement that despite the tariffs, profit margin expectations among contractors improved last month.

According to Anirban Basu, chief economist at ABC, almost 22 percent of contractors saw at least one project getting delayed or canceled in April due to tariffs, up from 18 percent in the previous month. In addition, many are also grappling with tariff-related jumps in material prices.

However, “contractors remain busy despite these headwinds; backlog rose in April and is now at the highest level since September 2023,” he said, adding that ABC members continue to remain upbeat regarding the near-term market outlook.

Demand Slowdown

Spring season sales have been subdued this year, with pending home sales falling 3.4 percent year-over-year during the four weeks ending May 11, real estate brokerage Redfin said in a May 15 statement.

In total, 89,132 pending sales were recorded for the period, which the brokerage says is the “lowest level on record for this time of year aside from 2020.”

High mortgage rates and home prices have pushed up the median monthly housing payment to $2,860, just $6 below the all-time high.

Meme Loggins, a Redfin agent in Portland, Oregon, said many prospective buyers are filled with a “lot of doubt and hesitation.”

“People are starting their home search, then backing out because they either talked to their lender and realized how high their monthly payments would be, or they’re feeling jittery about tariffs, a potential recession, and/or the possibility of getting laid off,” Loggins said.

A May 8 report from the National Association of Realtors (NAR) revealed that over 80 percent of the 228 tracked metros saw home prices rise in the first quarter, with 11 percent seeing double-digit price gains.

“Most metro markets continue to set new record highs for home prices,” said NAR Chief Economist Lawrence Yun.

“In the first quarter, the Northeast performed best in both sales and price gains by percentage. Despite the stronger job additions, the South lagged with declining sales and virtually no price appreciation.”

The national median single-family existing-home price was at $402,300, up 3.4 percent from the same period last year. The monthly mortgage payment for a typical single-family existing property with a down payment of 20 percent was $2,120, up over 4 percent year-over-year.

Of the 10 most expensive housing markets in the United States, eight were in California.

According to Yun, very expensive home prices are a reflection of “multiple years of home underproduction in those metro markets.”

“Another factor is the low homeownership rates in these areas, implying more unequal wealth distribution. Affordable markets tend to have more adequate supply and higher homeownership rates.”

On the plus side, housing affordability improved marginally in the first quarter, with families spending 24.4 percent of their earnings to make monthly mortgage payments, down from 24.8 percent in Q4, 2024.