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Single-Family Starts Edge Higher but Affordability Challenges Persist

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Single-family housing starts posted a modest gain in July as builders continue to contend with challenging housing affordability conditions and a host of supply-side headwinds, including labor shortages, elevated construction costs and inefficient regulatory costs.

Led by solid multifamily production, overall housing starts increased 5.2% in July to a seasonally adjusted annual rate of 1.43 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The July reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.8% to a 939,000 seasonally adjusted annual rate and are down 4.2% on a year-to-date basis. The multifamily sector, which includes apartment buildings and condos, increased 9.9% to an annualized 489,000 pace.

The slowdown in single-family home building has narrowed the home building pipeline. There are currently 621,000 single-family homes under construction, down 1% in July and 3.7% lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply.

On a regional and year-to-date basis, combined single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South and 0.5% lower in the West.

Overall permits decreased 2.8% to a 1.35-million-unit annualized rate in July. Single-family permits increased 0.5% to an 870,000-unit rate and are down 5.8% on a year-to-date basis. Multifamily permits decreased 8.2% to a 484,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.6% lower in the Northeast, 9.1% higher in the Midwest, 3.4% lower in the South and 5.1% lower in the West.

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June Single-Family Permits Slumps, Multifamily Gains

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Single-family housing permits continued a downhill trend for the sixth month in a row. The continuous decline in single-family permits highlights persistently weak housing demand, tied to affordability challenges like high mortgage rates. Builders appear cautious amid economic uncertainty, labor constraints, and rising inventories. The uptick in multi-family permits suggests a potentially stabilizing trend, though it’s important to note its volatility. The housing market’s mixed signals—weak single-family coupled with some resilience in multi-family—could mean continued drag on residential investment and the broader economy this year.

Over the first six months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 485,935. On a year-over-year (YoY) basis, this is a decline of 5.6% over the June 2024 level of 514,728. For multifamily, the total number of permits issued nationwide reached 244,812. This is 2.9% higher compared to the June 2024 level of 237,935.

Year-to-date ending in June, single-family permits were up in one out of the four regions. The Midwest posted a small increase of 1.8%. The Northeast was 1.7% lower, the South was down by 6.5%, and the West was down by 8.1% in single-family permits during this time. For multifamily permits, three out of the four regions posted increases. The Midwest was up by 22.4%, the West was up by 8.0%, and the South was up by 7.1%, Meanwhile, the Northeast declined steeply by 30.0%, driven by the New York-Newark-Jersey City, NY-NJ MSA which declined by 40.0%.

Between June 2025 YTD and June 2024 YTD, 15 states posted an increase in single-family permits. The range of increases spanned 19.9% in Hawaii to 0.2% in Kentucky. The remaining 35 states and the District of Columbia reported declines in single-family permits with the District of Columbia reporting the steepest decline of 24.2%.

The ten states issuing the highest number of single-family permits combined accounted for 63.0% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 78,104 permits over the first six months of 2025; this is a decline of 8.0% compared to the same period last year. The second highest state, Florida, decreased by 10.6%, while the third highest, North Carolina, posted a decline of 0.9%.

Between June 2025 YTD and June 2024 YTD, 29 states recorded growth in multifamily permits, while 21 states and the District of Columbia recorded a decline. Iowa (+165.5%) led the way with a sharp rise in multifamily permits from 1,178 to 3,128, while Alabama had the largest decline of 49.6% from 1,788 to 901.

The ten states issuing the highest number of multifamily permits combined accounted for 61.8% of the multifamily permits issued. Over the first six months of 2025, Florida, the state with the highest number of multifamily permits issued, experienced an increase of 25.0%. Texas, the second-highest state in multifamily permits, saw an increase of 14.1%. California, the third largest multifamily issuing state, increased by 11.5%.

At the local level, below are the top ten metro areas that issued the highest number of single-family permits.

For multifamily permits, below are the top ten local areas that issued the highest number of permits.

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Multifamily Developer Confidence Increases in Second Quarter

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Confidence in the market increased for multifamily developers in the second quarter of 2025, according to  the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB).  The MMS produces two separate indices.  The Multifamily Production Index (MPI) was up two points year-over-year to 46.  The Multifamily Occupancy Index (MOI) had a reading of 82, up one point year-over-year.

Multifamily developer confidence experienced a slight increase compared to last year, most notably from the subsidized subcomponent.  This is due in part to optimism surrounding the expansion of federal affordable housing resources flowing from the recent congressional reconciliation bill.  However, high interest rates, rising construction costs, limited land availability and restrictive local regulations are still significant issues in certain parts of the country.  Even with these headwinds, multifamily starts are becoming less constrained as the number of apartments under construction falls and normalizes.  As a result, NAHB is forecasting starts to be modestly higher in 2025 compared to 2024, but well below levels experienced in 2023.

Multifamily Production Index (MPI)

The MMS asks multifamily developers to rate the current conditions as “good”, “fair”, or “poor” for multifamily starts in markets where they are active.  The index and all its components are scaled so that a number above 50 indicates that more respondents report conditions as good rather than poor. The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized) and the built-for-sale (or condominium) market.

Two components experienced year-over-year increases: the component measuring subsidized units jumped 10 points to 61 and the components measuring mid/high-rise rose seven points to 36.   The component measuring garden/low-rise and built-to-sale units both fell three points year-over-year to 50 and 35, respectively.

Multifamily Occupancy Index (MOI)

The survey also asks multifamily property owners to rate the current conditions for occupancy of existing rental apartments, in markets where they are active, as “good”, “fair”, or “poor”.  Like the MPI, the MOI and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than report it as poor.  The MOI is a weighted average of three built-for-rent market segments (garden/low-rise, mid/high-rise and subsidized). 

Two of the three MOI components experienced year-over-year increases in the second quarter of 2025.  The component measuring subsidized units rose by five points to 90 and the garden/low-rise component increased two points to 84.  Meanwhile, the component measuring mid/high-rise units fell three points to 73.  Nevertheless, all three MOI components remain well above the break-even point of 50.

The MMS was re-designed in 2023 to produce results that are easier to interpret and consistent with the proven format of other NAHB industry sentiment surveys.  Until there is enough data to seasonally adjust the series, changes in the MMS indices should only be evaluated on a year-over-year basis.

Please visit NAHB’s MMS web page for the full report.

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Single-Family Starts Weaken in June as Affordability Challenges Persist

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Single-family housing starts declined in June to the lowest rate since July 2024 as elevated interest rates, rising inventories and ongoing supply-side issues continue to act as headwinds for the housing sector.

Due to a solid increase in multifamily production, overall housing starts increased 4.6% in June to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The June reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.6% to an 883,000 seasonally adjusted annual rate and are down 10% compared to June 2024. The multifamily sector, which includes apartment buildings and condos, increased 30% to an annualized 438,000 pace.

Single-family building conditions continued to weaken in June as housing affordability challenges caused builder traffic to move lower as buyers moved to the sidelines. Rising levels of resale inventory are also a headwind for the industry.

Single-family home building in the South is down 12.4% on a year-to-date basis, far outpacing declines in the Northeast and the West. However, single-family home building is up 10% on a year-to-date basis in the Midwest, where housing affordability conditions are generally better than much of the nation.

On a regional and year-to-date basis, combined single-family and multifamily starts were 28.8% higher in the Northeast, 13.1% higher in the Midwest, 8.1% lower in the South and 0.6% lower in the West.

Overall permits increased 0.2% to a 1.40-million-unit annualized rate in June. Single-family permits decreased 3.7% to an 866,000-unit rate and are down 8.4% compared to June 2024. Multifamily permits increased 7.3% to a 531,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.9% lower in the Northeast, 8.2% higher in the Midwest, 3.3% lower in the South and 3.7% lower in the West.

The declines for single-family home building have caused the number of single-family homes under construction to level off. There are currently 622,000 single-family homes under construction, which is 6% lower than a year ago. The number of apartments under construction in June, 739,000, is 18.8% lower than a year ago.

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2024 Multifamily Construction: Units Completed Reaches 38-year High

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Multifamily units completed in 2024 recorded their highest level since 1986 at 608,000 units, according to NAHB analysis of the Census Bureau’s Survey of Construction. For the eighth consecutive year, most multifamily units were in buildings with 50 or more units (these will be labeled as high-density buildings).

As shown below, this trend is relatively new. Dating back to the earliest estimates in the series (1972), most multifamily units were historically located in buildings with less than 50 units (low-medium density buildings). Of the total 608,000 multifamily units completed in 2024, 330,000 (54%) were in high-density buildings while the remaining 278,000 (46%) were in low-medium density buildings.

Regional Distribution

The South continued to be the leading region in terms of units completed, rising from 212,000 in 2023 to 292,000 completions in 2024. The South accounted for 48% of the total number of completions; the West held 27% (163,000), the Midwest 14% (87,000), and the Northeast 11% (68,000). Singularly, the South was the only region where the number of units completed in low-medium density buildings outpaced the number in high-density buildings. The South had 147,000 completions in low-medium density compared to 145,000 units in high-density.

Conversely, in the Midwest and Northeast the number of units in high-density buildings nearly doubled those of low-medium density buildings. For the Midwest, there were 58,000 units in high-density buildings and 29,000 low-medium density units. The Northeast had 45,000 units in high-density buildings and 23,000 low-medium density units. The West featured an almost 50/50 split with 82,000 high-density units and 81,000 low-medium density.

Built-for-Rent

Among multifamily units completed in 2024, 95% were built-for-rent at a level of 580,000. Over half of these units (55%) were in a building with 50 units or more. This is a seismic shift towards high-density buildings, as this share was only 25% in 2004. Over the past twenty years, there has consistently been a falling share of units in buildings with 10-19 units, as the share in 2004 was 24%, while in 2024 this share only accounts for 4% of completed units.

Built-for-Sale

The number of multifamily units built-for-sale rose from 20,000 in 2023 to 29,000 in 2024. High-density buildings continued to be the primary type of building where these units were built, with 40% of built-for-sale units being completed in buildings with 50+ units. This share was up from 28% in 2023. The largest loss in market share for multifamily built-for-sale units was for buildings with 10-19 units, dropping from 23% in 2023 to just 13% in 2024.

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Sharp Drop in Multifamily Production Brings Overall Housing Starts Down

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A sharp decline in multifamily production pushed overall housing starts down in May, while single-family output was essentially flat due to economic and tariff uncertainty along with elevated interest rates.

Overall housing starts decreased 9.8% in May to a seasonally adjusted annual rate of 1.26 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The May reading of 1.26 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 0.4% to a 924,000 seasonally adjusted annual rate and are down 7.3% compared to May 2024. The volatile multifamily sector, which includes apartment buildings and condos, decreased 29.7% in May to an annualized 332,000 pace.

On a year-to-date basis, single-family starts are down 7.1%. In contrast, multifamily 5-plus unit starts are up 14.5% as more prospective home buyers remain on the sidelines helping rental demand.

Single-family permits and construction starts are down on a year-to-date basis for 2025 for what has been a disappointing spring housing market, given ongoing elevated mortgage interest rates, challenging housing affordability conditions led by higher construction costs, and macroeconomic uncertainty. NAHB is forecasting that 2025 will end with a decline for single-family housing starts.

The number of single-family homes currently under construction totaled 623,000 homes as of May. This is 1.3% lower than April, 7.6% lower than a year ago and 25% lower than the post-Great Recession peak level in June 2022. There were 752,000 apartments under construction in June, 4.6% lower than May and 18.2% lower than a year ago.

On a regional and year-to-date basis, combined single-family and multifamily starts were 21.1% higher in the Northeast, 10.8% higher in the Midwest, 6.8% lower in the South and 1.6% lower in the West.

Overall permits decreased 2% to a 1.39-million-unit annualized rate in May. Single-family permits decreased 2.7% to an 898,000-unit rate and are down 6.4% compared to May 2024. Multifamily permits decreased 0.8% to a 495,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 17.2% lower in the Northeast, 6% higher in the Midwest, 5.4% lower in the South and 3.7% lower in the West.

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HBGI Q1 2025: Multifamily Growth in Smaller Markets

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Single-family construction growth slowed substantially across all markets in the first quarter of 2025, according to the Home Building Geography Index (HBGI).  Multifamily construction growth remained negative in the largest markets but reported significant expansion in lower population density areas. The HBGI tracks single-family and multifamily permits across seven population density delineated geographies in the United States.  

Single-Family

Among the HBGI geographies, the highest growth in the first quarter of 2025 was registered in small metro core counties, which increased 3.2% year-over-year on a four-quarter moving average basis (4QMA). The market with the largest decline in growth between the fourth quarter and first quarter was large metro core counties, which saw its four-quarter moving average growth rate fall from 9.4% to 1.3% (-8.1 pp). Two geographies, large metro outlying areas and non metro/micro counties, reported declines in the first quarter, down 0.2% and 0.4% respectively.

In terms of market share, single-family construction took place primarily in small metro core county areas, representing 29.2% of single-family construction. The smallest single-family construction market remained non metro/micro county areas, with a 4.2% market share. Single-family construction market share have been stable since the first quarter of 2024, with the largest gain being 0.4 percentage points in small metro core counties over the year.  

Multifamily

Multifamily construction expanded 33.2% in large metro outlying areas in the first quarter, the highest growth (4QMA) since the second quarter of 2022 when this geography grew 71.8%. Growth was present in three other geographies, with micro counties up 29.3%, small metro outlying counties up 18.5%, and non metro/micro counties up 3.7%.

Because of the notable increase in multifamily construction occurring in smaller markets, market shares have shifted over the past two years. Large metro core counties, where a plurality of construction takes place, saw a 4.8 percentage point drop in market share between Q1 of 2024 and 2025. The largest construction gains have been in low population density areas, with the combined market share for small metro outlying counites, micro counties and non metro/micro counties growing 2.2 percentage points from 7.8% to 10.0% between Q1 2024 and 2025.

The first quarter of 2025 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi.

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Multifamily Absorption Moves Lower for New Apartments

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The percentage of new apartment units that were absorbed within three months after completion continued to trend lower, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed pulled back slightly in the fourth quarter of 2024 but remained elevated near historical highs after posting a third straight quarter of above 100,000 completions.  

Apartments

The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 45%, coupled with 126,100 units completed in the fourth quarter of 2024. The large number of units completed each quarter continues to be a positive sign on the overall inflation front, as shelter inflation remains stubbornly high. More new apartments should help slow rent growth to lower levels in the coming months.

Along with the three-month absorption rate and completions, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. Solely focusing on the 12-month absorption rate, it remained at its lowest level since the start of the pandemic, registering a rate of just 90%. This means that 10% of the 99,850 apartments completed in the first quarter of 2024 remain unoccupied a year after completion. Regional SOMA data indicates that apartments completed over a year ago remain unoccupied primarily in the Midwest (12%) and the South (12%). The Northeast reported only 2%, while the West reported 6%.

Condominiums and Cooperative Units

The 3-month absorption rate for new condominiums and cooperative units rose one percentage point up to 67%. Total completions of new condominiums and cooperative units, according to the SOMA, fell in the fourth quarter from 4,793 to 2,880. Completions of these units peaked in the second quarter of 2018 at 7,996 and has steadily fallen since then.

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94% Multifamily Built-for-Rent Share

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According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts increased during the first quarter of 2025. For the quarter, 88,000 multifamily residences started construction. Of this total, 83,000 were built-for-rent. This was almost 11% higher than the first quarter of 2024.

The market share of rental units of multifamily construction starts was 94% for the first quarter. A historical low market share of 47% for bult-for-rent multifamily construction was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.

For the first quarter, there were 5,000 multifamily condo unit construction starts, flat from a year ago.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. However, according to the first quarter 2025 data, the average square footage of multifamily construction starts fell back to 1,027 square feet. The median declined to 1,027 square feet.

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Gains for Multifamily Missing Middle over Last Year

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The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.

The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has generally disappointed since the Great Recession. However, there has been a noticeable uptick for this type of housing construction in recent data. For the first quarter of 2025, there were 5,000 2- to 4-unit housing unit construction starts. This is flat relative to the first quarter of 2024.

However, over the last four quarters this type of construction totaled 23,000 units, up 53% over the four quarters prior to that period.

As a share of all multifamily production, 2- to 4-unit development was just above 6% of total multifamily development for the first quarter. However this is still lower than recent historic trends. From 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction.

Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. But recent data offer hope for additional housing supply for these kind of homes.

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