May Housing Starts Fall More Than Expected as Multi-Family Projects Slump

11:22 AM EDT, 06/18/2025 (MT Newswires) -- US housing starts fell more than projected last month, driven by a sharp slump in multi-family projects, government data showed Wednesday.

Housing starts tumbled 9.8% sequentially to a seasonally adjusted annual rate of 1.26 million units in May, according to the Census Bureau and the Department of Housing and Urban Development. The consensus in a survey compiled by Bloomberg was for a 0.8% decline, based on an unrevised print for April.

The April reading was adjusted higher to 1.39 million units.

"Homebuilding activity fell in May as starts in the single-family segment remained soft, while the support from the multifamily sector retreated, with activity in this smaller (and typically more volatile) segment pulling back sharply for the first time in four months," Admir Kolaj, an economist at TD Economics, said in a report. "The decline in the headline measure is not entirely surprising as it comes alongside a tough backdrop for homebuyers and souring sentiment among homebuilders."

On Tuesday, data from the National Association of Home Builders and Wells Fargo showed that US homebuilder confidence in June reached its lowest level since December 2022 amid affordability headwinds and macro uncertainty.

Starts on buildings with at least five units slid 30% month on month to 316,000 units in May. The single-family component increased 0.4% to 924,000 units. Consolidated housing starts fell in all of the four main regions, except the West, government data showed.

Building permits, which is a forward-looking indicator of homebuilding, fell 2% on a monthly basis to 1.39 million units in May, while Wall Street expected a flat reading. Single-family unit permits decreased 2.7%, while authorizations of buildings with five or more units rose 1.4%.

Homebuilding is likely to remain subdued in the coming months amid mortgage rates close to 7% and an uncertain economic outlook due to trade tensions, according to Kolaj.

"While these headwinds will eventually fade, this will take time, with a sustained recovery in homebuilding likely a 2026 story," the economist said.

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