New-home construction rose in June on the back of a surge in the multifamily sector, while single-family starts declined. 

Overall new-home construction, which includes single-family homes as well as apartments, rose 4.6% month over month to a seasonally adjusted annual rate of 1,321,000 units from 1,263,000 units in May, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported. Year over year, the rate was down 0.5% from the June 2024 rate of 1,327,000.   

The softening in single-family starts reflects numerous headwinds facing the sector, including ongoing affordability issues, rising material costs and tariff-related uncertainties, elevated new-home supply and growing competition from existing homes, First American Deputy Chief Economist Odeta Kushi said. 

“Single-family permits sagged for the fourth consecutive month as builders pull back amid mounting challenges,” Kushi said. “The continued decline in single-family permits, combined with weakened builder sentiment, points to a slowdown in future single-family construction.” 

Specifically, single-family starts slid 4.6% month over month and 10% year over year to 883,000 in June, while multifamily starts jumped 30.6% month over month and 25.8% year over year to 414,000. 

“Affordability challenges and tariff uncertainty continue to weigh on demand,” Kushi added. “Builders are not only facing growing competition from the resale market but also grappling with elevated inventories of their own. The months’ supply of new homes increased to 9.8 months in May — well above the pre-pandemic 30-year average of around 6 months and up from 8.3 months in April.”