Housing starts clocked in at a seasonally adjusted rate of 1,549,000, a 14.4 percent decline from revised April levels, according to the U.S. Census Bureau and Dept. of Housing and Urban Development.

In a shifting real estate market, the guidance and expertise that Inman imparts are never more valuable. Whether at our events, or with our daily news coverage and how-to journalism, we’re here to help you build your business, adopt the right tools — and make money. Join us in person in Las Vegas at Connect, and utilize your Select subscription for all the information you need to make the right decisions. When the waters get choppy, trust Inman to help you navigate

Housing starts dipped dramatically in May as rising inflation and increasing mortgage rates climbed, according to a data released Thursday by the U.S. Census Bureau and Department of Housing and Urban Development.

Housing starts clocked in at a seasonally adjusted annual rate of 1.549 million homes, a 14.4 percent decline from revised April levels as demand for homes wanes amid rising rates, according to the new data. The data measures how many homes began construction in May.

“Single-family home building is slowing as the impacts of higher interest rates reduce housing affordability,”  National Association of Home Builders Chairman Jerry Konter said in a statement. “Moreover, construction costs continue to rise, with residential construction materials up 19 percent from a year ago. As the market weakens due to cyclical factors, the long-term housing deficit will persist and continue to frustrate prospective renters and homebuyers.”

The number of new privately owned homes authorized by building permits was at a seasonally adjusted annual rate of 1.695 million, a 7 percent decrease from April levels, while permits for new single-family homes were at 1.048 million, an annual rate 5.5 percent below the levels seen in April.

Home completions for privately owned homes were at a seasonally adjusted annual rate of 1.465 million, which was 9.1 percent above April’s estimate and 9.3 percent above completions for May 2021, a result of increased construction activity seen in several past quarters. Single family homes were completed at an annual rate of 1.343 million, a 2.8 percent increase from the previous month’s numbers.

The slowdown in construction starts and building permits comes as interest rates shouldered the biggest hike in 28 years on Wednesday and mortgage rates climbed above 6 percent.

Cooling demand combined with inflation-induced rising construction costs is enough to slow the housing market, with homebuilder sentiment down month over month as laborers witness a slowdown in demand.

Although builders may have dialed back the pace at which they’re starting new homes, there are currently 822,000 thousand single-family homes under construction — the highest level since November 2006. Construction delays may explain why there are so many homes being built, Bill McBride wrote in his CalculatedRisk newsletter.

Email Ben Verde

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription