U.S. Housing Starts and Permits (May 2026)

Homebuilding activity falls to six-year low in May

• Housing starts fell 15.4% month-on-month (m/m) in May to 1.18 million (annualized) units, much lower than the market consensus forecast for a milder decline to 1.41 million units. This marked the lowest level since May 2020. April's tally was revised down by 73k to 1.39 million. 
• May's decline was largely driven by a sharp reversal in multifamily starts, which fell by 198k units or 40.2% m/m – the steepest monthly drop since April 2009.  Single-family starts fell by 1.9% m/m or 17k units.
• Residential permits fell 0.7% m/m to 1.41 million (annualized). This was driven by a 2.8% decline in the multi-family segment, while permitting activity in the single-family segment recorded a modest improvement (+0.6%).
• Among the four Census regions, only the Midwest recorded an improvement in homebuilding activity in May (+3.7%). Housing starts recorded double digit declines in all remaining regions, falling 26.8% in the Northeast, 17.2% in the West, and 17.0% in the South.
   

Key Implications

• Homebuilding activity lost more than a little steam in May, with housing starts falling to lows last reached during the 2020 pandemic. While single family starts continued to edge lower, it was the unusually sharp drop in the volatile multifamily segment that sank the headline measure. Within the multifamily space, conditions have been soft for a while (see our report here), and up until this morning, hadn't meaningfully weighed on building activity. That said, the weakness appears to be overdone, and we could likely see some giveback over the coming months. 
• The current interest rate environment provides little support to construction activity. Mortgage rates continue to hover near 6.5% – up 50 basis points since the start of the Middle East conflict. While we'll soon get a read as to where the new Fed Chair stands on monetary policy, markets continue to expect the most likely outcome over the coming months is for the Fed to remain on the sidelines. With the rate environment unlikely to materially change anytime soon, affordability pressures will persist through the rest of the year. As such, any improvement in homebuilding activity over the rest of the year, is likely to be only gradual.

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