Housing starts plunged in May, coming in well below an already low consensus estimate after a sharp drop in new multifamily construction. 

Overall new-home construction, which includes single-family and multifamily units, fell 9.8% to a seasonally adjusted annual rate of 1,256,000 units from 1,392,000 units in April, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said. Year over year, the rate was down 4.6% from the May 2024 rate of 1,316,000.  

The consensus estimate was for an annual rate of 1,370,000 units.   

The sharp slide in housing starts comes as homebuilder confidence remains negative. Many buyers have moved to the sidelines due to high mortgage rates, economic uncertainty and tariff concerns. The National Association of Home Builders/Wells Fargo Housing Market Index fell to its third-lowest reading since 2012 in June. 

“Builders face higher financing costs, tariff uncertainty, softer demand from elevated rates, increased competition from rising existing-home inventory in key markets like Texas and Florida and higher inventories of their own,” First American Deputy Chief Economist Odeta Kushi said. “This mix is weighing on builder sentiment and likely to slow single-family construction.” 

By type, multifamily starts were down 30.4% month over month but up 5% year over year at an annual rate of 316,000 units. Single-family starts were up 0.4% month over month and down 7.3% year over year at 924,000.