Housing starts in May fell to a seasonally adjusted annual rate of 1.256 million, down 9.8% compared with April and down 4.6% compared with May 2024, driven mainly by a sharp decline in multifamily production, according to the U.S. Census Bureau.
It was the lowest overall production rate since 2020.
The drop came as home builder sentiment fell to the lowest level since 2012.
Starts of detached single-family homes in May were at a rate of 924,000, an increase of 0.4% compared with April.
Starts of multifamily properties (five units or more per building) were at an annual rate of 316,000, a decrease of 30.4% compared with the previous month.
Building permits were also down. They were at an annual rate of 1.393 million, a decrease of 2.0% compared with April and down 1.0% compared with May 2024.
Permits for single-family homes were at a rate of 898,000, down 2.7% compared with April.
Authorizations for multifamily dwellings were at a rate of 444,000 in May, an increase of 1.4% compared with the previous month.
Housing completions were at a seasonally adjusted annual rate of 1.526 million, an increase of 5.4% compared with April but down 2.2% compared with May 2024.
“Our latest builder survey shows that development and market conditions remain a major concern for builders, with consumer confidence lower and elevated interest rates for buyers and builders,” says Buddy Hughes, chairman of the National Association of Home Builders (NAHB), in a statement. “Almost 40 percent of home builders reduced sales prices in the last month in order to offset difficult housing affordability conditions.”
“Single-family permits and construction starts are down on a year-to-date basis for 2025 for what has been a disappointing spring housing market, given ongoing elevated mortgage interest rates, challenging housing affordability conditions led by higher construction
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