Residential Building Contractors NAICS 2361

Jun 20, 2026 - Housing Starts Decline

• US housing starts dropped by 15.4% month-over-month and decreased 8.7% year-over-year in May, according to the US Census Bureau. Single-family starts declined by 1.9% in May compared to April and dropped 6.7% from May 2025. Multifamily starts for projects involving five or more units plummeted 41.6% in May compared to the previous month and were down 12.3% year-over-year. Single-family starts in May were at their lowest in eight months as high mortgage rates and building materials prices continue to put pressure on housing affordability. Combined with the weakness in multifamily starts, building activity reached a six-year low in May. According to Reuters, some economists suggest a pullback in single-family building activity may be necessary to clear a glut of excess inventory in the new-home market. While May's decline in multifamily starts was significant, building permit activity in the highly volatile segment fell by only 3.5%.
• Fitch Ratings revised its 2026 outlooks for the US homebuilding and North America building products sectors to deteriorating from neutral, citing affordability challenges, weak consumer sentiment, and mortgage rates expected to remain near 6.5% through year-end. Fitch forecasts new home sales will decline 2.5%, existing home sales will be flat to slightly lower, and single-family housing starts will fall 4.5%, while multifamily starts could rise nearly 10%. Homebuilders are expected to see low- to mid-single-digit revenue declines and weaker margins as they offer discounts and incentives to attract buyers. Fitch also expects weaker credit metrics across the sector, citing ongoing cost inflation, lower volumes, and reduced earnings visibility.

• Home builder confidence in the single-family market fell in June as builders remain concerned about housing affordability, higher construction costs, and elevated interest rates, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), dropped two points to 35 in June 2026. Any HMI reading over 50 indicates that more builders see conditions as good than poor. June marked the 14th consecutive month the HMI remained below 40, a level not seen since the foreclosure crisis of 2011-2012. The survey also showed that 35% of builders reduced home prices in June to lure potential buyers off the sidelines, although the average price reduction of 6% remained unchanged from April. Builders argue that regulatory hurdles - including permitting delays, density limits, and inefficient zoning rules - create bottlenecks that slow new housing growth.
• Some deep-pocketed investors are betting on the long-term viability of the US home-building market, despite ongoing industry challenges, according to The Wall Street Journal. Berkshire Hathaway's agreement to acquire the builder Taylor Morrison in May followed several recent US home-builder purchases by Japanese firms. Large investors see opportunities to improve efficiency through modular construction. About 15% of new homes in Japan use modular construction, compared with only 3% in the US, according to UBS. A UBS study suggests modular building can reduce waste by 20%, helping builders cope with margin pressure from incentives aimed at attracting buyers. The industry's lack of innovation has contributed to a 30% decline in labor productivity since 1970, even as productivity more than doubled across the broader economy. Berkshire also appears to be betting that housing demand will recover, allowing more efficient builders to gain market share in an undersupplied housing market.