The number of new single-family homes in the U.S. on which construction has commenced dropped by 12 percent in April compared to a year ago, according to new data from the National Association of Home Builders (NAHB).
The decrease was a result of economic uncertainty over the potential impact of President Donald Trump‘s tariffs, the growing cost of building materials, and historically high mortgage rates, the NAHB said.
Last month’s decrease in single-family starts — a measure of builders’ willingness to spend resources on new housing construction projects — comes after a similar fall in March.
Newsweek contacted NAHB for comment on Tuesday outside of regular working hours.
A construction worker building a new home in a neighborhood destroyed by the Palisades Fire in California earlier this month.
Justin Sullivan/Getty Images
Why It Matters
The number of permits to build new single-family units in the U.S. plummeted after the recession of 2007-2009 and never completely recovered, leaving the country with a severe shortage of homes compared to the growing demand. This contributed substantially to the current housing affordability crisis.
While a growing number of new construction projects have been approved over the past few years, the country is still far from closing the gap between supply and demand.
Builders have also warned that Trump’s sweeping tariffs, impacting building materials such as softwood timber and lumber, will increase costs and potentially discourage new projects.
What To Know
Trump’s tariffs included a 10 percent baseline levy on most U.S. trading partners and rates up to 50 percent on some nations.
Exemptions for Canadian lumber and Mexican gypsum helped buffer immediate price hikes, but the NAHB estimates that tariffs have still added about $9,200 to the cost of building an average new home. Building material prices were already on the rise before the tariffs, and are now up 34 percent since December 2020.
About 60 percent of U.S. builders reported in April that suppliers had already raised or planned to raise material prices in response to the tariffs, according to a survey conducted by NAHB last month.
These higher costs are reflected in builders’ shrinking confidence in starting new construction projects.
Overall housing starts — the number of new home projects builders would begin if development kept this pace for the next 12 months — increased by 1.6 percent in April to a seasonally adjusted annual rate of 1.36 million units, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
However, the NAHB noted that single-family home starts were down 2.1 percent to a seasonally adjusted annual rate of 927,000, and down 12 percent from a year earlier.
Meanwhile, multi-family home starts were up 10.7 percent to an annualized rate of 434,000, as the construction of apartment buildings and condos picks up.
Overall permits decreased 4.7 percent to a 1.41-million-unit annualized rate in April, with single-family permits falling by 5.1 percent to a 922,000-unit rate, down by 6.2 percent compared to April 2024.
The drop in the number of single-family starts in April follows a similar decrease in March, when they were down by 14.2 percent.
Single-family homes represent the majority of housing units on the U.S. market. In 2023, 85 million out of the total 133 million occupied units in the country were single-family homes, according to data from Statista.
What People Are Saying
Buddy Hughes, NAHB chairman and a home builder and developer from Lexington, North Carolina, said in a press release: “The decline in single-family housing starts in April mirrors builder sentiment, as elevated interest rates, uncertainty on the tariff front and rising construction costs are exacerbating housing affordability challenges. In turn, this is making it more difficult for builders to deliver entry-level housing at a price point that is accessible to home buyers.”
Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, said: “Economic uncertainty, especially around interest rates and inflation, continues to impact both builder financing costs and buyers’ ability to qualify. However, recent developments on the tariff front concerning the United Kingdom and China along with major tax legislation advancing in Congress should provide a boost to housing demand and positive momentum for the economy.”
Associated Builders and Contractors’ chief economist Anirban Basu told Newsweek previously: “If these tariffs remain in place, materials prices will likely continue to rise. One exception would be if there is a sharp economic downturn, in which case the effect of the tariffs could be countervailed by the sizable decrease in demand for certain commodities.”
What Happens Next
Last month, the number of single-family homes under construction stood at 630,000, while the number of multi-family units being built was 788,000.
The U.S. needs 3.8 million more units to fix the current housing affordability gap, according to an estimate by Realtor.com — but it would take 7.5 years to build that many homes at the current pace of construction.