New home construction in the United States rebounded by 4.6% in June, with a sharp increase in multi-family homes but the sluggish performance of single-family homes market cannot be ignored.

In June, the new housing starts in the United States rebounded driven by multi-family residential projects, but the single-family housing market, which occupies a larger market share, remained weak, reflecting that developers still face the dual challenges of inventory backlog and insufficient housing affordability. According to government data released on Friday, the seasonally adjusted annual rate of new housing starts in June increased by 4.6% to 1.32 million units, reversing the almost 10% decline in May, with economists' median forecast at 1.3 million units. Although activity in apartment construction has picked up, the overall sluggishness in the new housing market indicates that developers are slowing down their investment pace to absorb the highest level of new housing inventory in 17 years. Developers also face competition pressure from a surge in existing home listings - current mortgage rates close to 7% are prompting more homeowners to list their properties for sale. To cope with market pressure, builders are resorting to price cuts and promotions, but this also undermines their willingness to develop. Government data shows that the annual rate of single-family housing starts in June fell to 883,000 units, hitting one of the lowest levels since early 2023. Meanwhile, multi-family housing starts rebounded by 30% after a significant decline in the previous month. These data mark the end of the second quarter, signaling a slight drag on GDP from residential investment. The Atlanta Fed's GDPNow model predicted before the report was released that the negative impact of this sector on economic growth would be the largest since late 2022. Bloomberg economist Stuart Paul said, "We expect builders to continue focusing on developing smaller, more affordable units, as housing affordability has become a widespread social issue." Ben Ayers, senior economist at Nationwide Insurance, stated this week that headwinds faced by builders such as mortgage rates and uncertainty in Trump's tariff policy may ease by 2026. However, he also pointed out, "The second half of 2025 is indeed hard to be optimistic about." This assessment is supported by data that shows building permits for single-family homes being constructed in the future have continued to decline for the fourth consecutive month, reaching a two-year low. Government data shows that the number of single-family homes under construction has continued to decline for three years. Regionally, single-family home construction is generally shrinking across the United States, with the most significant declines in the western and southern regions. It is important to note that new housing start data fluctuates significantly. The government report shows a 90% confidence interval ranging from a 6% decline to a 15.2% increase. The National Association of Realtors will release its report on existing home sales for June on Wednesday, providing the latest insights into the resale housing market.