Housing starts retreat in May
Single-family housing starts dropped below the million mark as total start declined nearly 20 percent compared to a year ago.
Those are two of the highlights—or lowlights—from the latest residential construction report, released Thursday by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Total housing starts for May are at a seasonally adjusted annual rate of 1.277 million, down 5.5 percent from the revised April pace, and down 19.3 percent from a year ago.
Single-family starts slipped to 982,000—falling under the one million pace for the first time since October of 2023. Single-fam starts were down 5.2 percent for the month, and down 1.7 percent for the year.
Looking at the four major regions of the country, the West was the lone region to produce any kind of positive growth in residential construction, according to the government data. Total starts in the West were up 10.4 percent compared to the prior month. Single-family starts in the West were up 16.9 percent compared to a year ago.
Here's a look at residential construction by region:
At the National Association of Home Builders, the data came as little surprise.
“Overall lower housing production correspond with our latest industry surveys, which show builders are concerned with a high interest environment that is making it harder to get acquisition, development and construction loans to increase home building activity,” said Carl Harris, chairman of NAHB and custom home builder from Wichita, Kansas. “Higher rates for builder and developer loans, along with ongoing supply-side challenges regarding construction labor and buildable lots, are acting as headwinds for new home and apartment construction.”
Once again, hight mortgage rates were cited. They averaged 7.06% in May per Freddie Mac, the highest reading since November 2023. This high interest rate environment is causing many potential buyers to remain on the sidelines.
“It is not just the single-family market that is experiencing challenges. The three-month moving average for multifamily starts is the lowest since the fall of 2013 as the multifamily development deceleration continues,” said NAHB Chief Economist Robert Dietz.
Overall permits decreased 3.8% to a 1.39-million-unit annualized rate in May. Single-family permits decreased 2.9% to a 949,000 unit rate; this is the lowest pace since June 2023. Multifamily permits decreased 5.6% to an annualized 437,000 pace.
