Housing starts dived in May as multifamily pulled back and single-family production stalled, according to a new report from the National Association of Home Builders (NAHB) based on data from HUD and the Census Bureau. NAHB cited economic and tariff uncertainty and high interest rates as the reasons.
Overall, housing starts slumped 9.8% in May to a seasonally adjusted annual rate of 1.26 million units, meaning the number of units that would be expected to be constructed over the next 12 months at this rate.
The multifamily sector plummeted 29.7% to an annualized total of 332,000 units. However, starts of five or more units rose 14.5% as many would-be homebuyers held back from purchasing.
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Single-family starts rose just 0.4% to 924,000 at the seasonally adjusted annual rate – down 7.3% from their level in 2024 and down 7.1% on a year-to-date basis. NAHB chief economist Robert Dietz described the single-family spring housing market as disappointing. “NAHB is forecasting that 2025 will end with a decline for single-family housing starts,” he stated.
“Overall permits decreased 2% to a 1.39-million-unit annualized rate in May. Single-family permits decreased 2.7% to an 898,000-unit rate and are down 6.4% compared to May 2024. Multifamily permits decreased 0.8% to a 495,000 pace,” the report noted.
Year-to-date on a regional basis, single and multifamily starts rose 21.1% in the Northeast, 10.8% in the Midwest, but fell 6.8% in the South and 1.6% in the West. The only region where permits rose was the Midwest, where they climbed 6.8%. In the Northeast, the number fell by 17.2%, in the South by 5.4%, and in the West by 3.7%.
According to the NAHB, almost 40% of home builders reduced sales prices in May to offset difficult housing affordability conditions. Its outlook for the future is also gloomy. “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,” stated NAHB chairman Buddy Hughes.
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