U.S. single-family housing starts hit eight-month low in May

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U.S. housing starts hit low

Highlights

Single-family housing starts fell 1.9% in May to 882,000 units, the lowest in eight months and 6.7% below year-ago levels.
Multi-family starts plunged 41.6% to 284,000 units in May, contributing to a 15.4% drop in overall housing starts to 1.177 million units.
Permits for future single-family homes rose 0.6% to 886,000 units, while builder sentiment deteriorated in June amid rising mortgage rates and construction costs.

May construction data and financing pressure

According to Reuters, as reported by the Commerce Department's Census Bureau, single-family housing starts fall 1.9% in May to a seasonally adjusted annual rate of 882,000 units. The reading marks the weakest level in eight months, and single-family homebuilding is down 6.7% from a year earlier.

Permits for future single-family construction rise 0.6% to an annual rate of 886,000 units, though they are still 1.8% lower than a year earlier. Mortgage rates have increased as the U.S.-Israeli war on Iran pushes up oil prices, inflation pressures and Treasury yields, with Freddie Mac data showing the popular 30-year fixed mortgage rate has climbed by more than 50 basis points since the conflict begins at the end of February.

Washington and Tehran say on Sunday that they have agreed terms to end the war and reopen the Strait of Hormuz. Even before the conflict, the housing market is under pressure from import tariffs that raise the cost of building materials and household appliances.

Housing sector drag on growth outlook

Residential investment, which includes homebuilding, contracts for five straight quarters, underscoring the sector's weak contribution to the broader economy. A National Association of Home Builders survey released on Monday shows builder sentiment deteriorates in June, with the group citing rising material costs, elevated mortgage rates and affordability challenges.

Multi-family construction also weakens sharply. Starts for projects with five units or more plunge 41.6% to a 284,000-unit rate in May and are down 12.3% from a year earlier, helping pull overall housing starts down 15.4% to a 1.177 million-unit pace, 8.7% below the May level a year ago.

Building permits for multi-family projects slip 3.5% to a 474,000-unit rate. Overall building permits edge down 0.7% to 1.413 million units in May and are 0.2% lower than a year earlier.

Whirlpool’s tariff experience highlighted how import protections can backfire even on companies that publicly champion them, turning into direct cost and operational pressures for U.S. appliance makers. We also noted that these protectionist policies can add financial burdens rather than delivering clear competitive advantages—an issue that can spill over into higher costs for households and housing-related purchases.

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