Multifamily drove housing starts

July 17, 2026

Housing starts blew past expectations, jumping 19.0% in June to a seasonally adjusted annual rate of 1.43 million, following May’s revision to 1.20 million. Those gains came from multifamily projects, which make up a more volatile data series. Compared to a year ago, total housing starts rose 3.5%.

Single-family starts slipped 0.2% after May was revised higher. Only the West captured a gain in single-family starts for June. Starts have fallen to their lowest level since the start of the year, at 895,000. Single-family units under construction declined 1.2% while completions jumped 6.6%. Builders are finishing homes faster than they are breaking new ground for the second straight month.

Mortgage rates have reverted after a drop in rates that followed the initial ceasefire. The 30-year fixed averaged 6.55% in the week ending July 16, up from 6.49% the prior week; it remains below the 6.75% of one year ago. Sticky service sector inflation and heavy bond issuance are keeping a floor under long-term rates.

Starts for buildings with five units or more surged 76.3% to 513,000. The series is typically very noisy; the three-month-moving average indicates construction added 2.5% in June after May data were revised slightly higher. The Midwest and West posted the strongest multifamily construction activity.  

Multifamily completions fell for the second straight month, which will help with the absorption of vacant apartments and lead to higher rents into 2027. The wildcard is the supply that could potentially come on the market due to the rollback in temporary protected status work visas in July. Hundreds of thousands of workers are covered; they are mostly renters.

Permits fell 3.0% to 1.37 million and 2.3% below year-ago levels. Single-family permits fell 2.4% to 871,000, the lowest in nearly a year. Multifamily permits for buildings with five units or more dropped 4.9% to 445,000, the lowest in three months. Permits usually lead starts by a few months, signaling that even less construction activity is in the pipeline following the lackluster home buying and building season. 

Builder sentiment has been pessimistic for 15 consecutive months, the longest stretch since 2012, not long after the housing bust. Prospective buyers are stepping back. The share of builders who cut prices in July rose to 37%, up from 35% in June and 32% in May, with the average discount holding at 6%. Sales incentives ran at 63%, the 16th consecutive month at 60% or above. The recently enacted 21st Century ROAD to Housing Act addresses land use, zoning and financing, but implementation runs on a multi-year timeline and does nothing for activity this year.