Lexington, N.C.—A sharp decline in multifamily production pushed overall housing starts down in May, while single-family output fell almost completely flat due to economic and tariff uncertainty coupled with elevated interest rates, according to the National Association of Home Builders (NAHB).
Overall housing starts decreased 9.8% in May to a seasonally adjusted annual rate of 1.26 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The May reading of 1.26 million starts equals the number of housing units builders would begin if development kept this pace for the next 12 months. Within this number, single-family starts increased 0.4% to a 924,000 seasonally adjusted annual rate, but are down 7.3% compared to May 2024. The multifamily sector—including apartment buildings and condos—decreased 29.7% to an annualized 332,000 pace.
“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,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB), home builder and developer from here. “Almost 40% of home builders reduced sales prices in the last month in order to offset difficult housing affordability conditions.”
On a year-to-date basis, single-family starts are down 7.1%. In contrast, multifamily 5-plus unit starts are up 14.5% as more prospective home buyers remain on the sidelines.
“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 costs and macroeconomic uncertainty,” said NAHB chief economist Robert Dietz. “NAHB is forecasting that 2025 will end with a decline for single-family housing starts.”
On a regional and year-to-date basis, combined single-family and multifamily starts were 21.1% higher in the Northeast, 10.8% higher in the Midwest, 6.8% lower in the South and 1.6% lower in the West.
Overall permits decreased 2% to a 1.39-million-unit annualized rate in May. Additionally, single-family permits specifically decreased 2.7% to an 898,000-unit rate and are down 6.4% compared to May 2024. Multifamily permits decreased only 0.8% to a 495,000 pace.
Looking at regional permit data on a year-to-date basis, permits were 17.2% lower in the Northeast, 6% higher in the Midwest, 5.4% lower in the South and 3.7% lower in the West.