US Housing Starts Drop to the Weakest Pace Since 2020
US housing starts fell to their weakest pace since May 2020, with multi-family projects dropping sharply and single-family construction at an eight-month low. High mortgage rates, rising material costs, and unsold inventory are forcing builders to slow construction. The slowdown is widespread, affecting all regions except the Midwest. Analysts warn that imported inflation from global tensions may prolong affordability pressures.
What changed
New data confirms the May slowdown is part of a broader six-year decline, with October 2025 starts now matching the lowest levels since the pandemic.
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US Housing Starts Hit Six-Year Low as Builders Cut Back Amid Cost Pressures
confidence 95%US housing starts fell to their weakest pace since May 2020, with multi-family projects dropping sharply and single-family construction at an eight-month low. High mortgage rates, rising material costs, and unsold inventory are forcing builders to slow construction. The slowdown is widespread, affecting all regions except the Midwest. Analysts warn that imported inflation from global tensions may prolong affordability pressures.
What's confirmed:
- US housing starts dropped 15.4% in May to 1.177 million units, the lowest since May 2020, with multi-family projects falling 41.6%.
- Single-family housing starts hit an eight-month low in May due to higher mortgage rates and building material costs.
- The Midwest is the only region not experiencing a sharp decline in construction activity.
- Builders are slowing construction due to high costs, tariffs, and unsold inventory, with October 2025 starts at 1.246 million—the lowest since May 2020.
Still unconfirmed:
- Even after Middle East oil flows resume, price increases from the Iran war may persist longer than expected, potentially worsening affordability pressures.
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US Housing Starts Plunge to Six-Year Low Amid Builder Caution
confidence 98%US housing starts fell 15.4% in May to 1.177 million units, the weakest pace since May 2020, as high mortgage rates and rising costs force builders to slash construction. Multi-family projects dropped 41.6%, while single-family starts hit an eight-month low. All regions except the Midwest saw sharp declines, signaling a broad slowdown in residential construction.
What's confirmed:
- US housing starts fell 15.4% month-on-month in May to a seasonally adjusted annual rate of 1.177 million, the lowest since May 2020.
- Multi-family starts plunged 41.6% to 284,000, the lowest since November 2024, while single-family starts slipped 1.9% to 882,000.
- Regional declines were steepest in the Northeast (26.8% drop to 123,000), West (17.2% to 264,000), and South (17.0% to 594,000), with only the Midwest seeing a 3.7% increase to 196,000.
- Builders are reducing inventory of new homes for sale due to sluggish demand, lowering prices, offering mortgage rate subsidies, and slowing construction of spec homes.
- The decline was driven primarily by a steep slowdown in apartment projects, marking the weakest multifamily construction pace since 2020.
- Higher material and financing costs have eroded builder confidence, contributing to the sharp slowdown.
Still unconfirmed:
- Gold may see safe-haven demand due to the housing slowdown, though no direct market reaction data is confirmed.
- The stock market downturn today is partly attributed to housing weakness, though broader geopolitical factors (e.g., Iran oil deal) also influenced trading.