Builder Activity Drops 15% as Single-Family Recovery Stalls
Housing starts fell 15.4 percent in May to 1.177 million units, well below the 1.43 million economists expected. The Commerce Department report showed starts down 8.7 percent year-over-year, while residential permits slipped 0.7 percent to 1.413 million. The decline marks a sharp reversal from anticipated construction activity.
Builder sentiment dropped in May as mortgage rates and material costs continued to pressure affordability, according to the National Association of Home Builders. Economists attribute the slowdown to persistent financing constraints that have delayed the expected rebound in single-family construction. The May permits figure came in just below the 1.42 million forecast.
The construction pullback arrives as the industry faces a squeeze between high development costs and weak buyer demand. Single-family starts remain particularly vulnerable to rate volatility, with builders scaling back projects rather than risk unsold inventory. The gap between expected and actual starts suggests developers are reassessing pipeline commitments in response to market conditions.
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