U.S. housing starts and household formation slump as affordability worsens

Harvard Joint Center for Housing Studies reported that U.S. household growth slowed for a third consecutive year in 2025, falling to 1.1 million households—well below the 2.0 million average of 2020‑21. The decline reflects high housing costs, a weakened labor market, burdensome student debt, low consumer sentiment, reduced immigration and younger adults remaining in parental homes.

In May 2025, housing starts dropped 15.4 % to an annualized 1.18 million units. Multifamily construction plunged 40.2 % to 295 000 units, while single‑family starts slipped 1.9 % to 882 000 units. Builders cite elevated mortgage rates, affordability challenges and persistent labor shortages, with regional data showing modest resilience in the Northeast and declines in the Midwest, South and West.

The slowdown is echoed by rising renter cost‑burden, declining home‑sale activity and tighter inventories, prompting calls for expanded affordable‑housing policies, zoning reforms and increased federal assistance.