May 2025 Housing Market: Mixed Signals in New Construction

The May 2025 housing market exhibited a combination of resilience and volatility, with new residential construction data revealing significant shifts that are important to homebuyers, sellers, lenders, real estate agents, and attorneys. According to the U.S. Census Bureau and the Department of Housing and Urban Development, total housing starts declined by nearly 10% from April to May, marking the lowest level in five years.

But that number masks a deeper story: the decline was almost entirely due to a steep 30% drop in multifamily unit starts, while single-family starts remained relatively stable. These contrasting trends highlight the importance of considering broader perspectives when assessing market conditions and planning future transactions.

Single-Family Resilience Amid Multifamily Weakness

In the May 2025 housing market, overall housing starts declined to a seasonally adjusted annual rate of 1.256 million units. While this marked a sharp drop from April, the decline was driven almost entirely by the multifamily sector. Construction starts for buildings with five or more units plunged to 316,000—down 30.4% from the prior month. In contrast, single-family housing starts slightly increased to 924,000 units.

This trend signals a sustained demand for detached homes, even as broader economic uncertainties loom. For homebuyers, particularly those looking in suburban or less densely populated areas, the relative strength of the single-family market suggests greater availability and continued interest. Real estate agents may find that inventory in this segment remains competitive, but more reliable than the volatile multifamily sector.

For attorneys and title professionals, understanding the nuances of this trend can help streamline closings on new builds and manage client expectations. While multifamily developers may pause or delay projects, single-family builders appear more willing to navigate current market pressures to meet demand.

Builder Confidence Drops as Costs and Tariffs Create Uncertainty

A significant decline in homebuilder sentiment also shaped the May 2025 housing market. The National Association of Home Builders (NAHB) reported that confidence dropped to its lowest level since 2022. Builders cited rising construction costs, labor shortages, and new uncertainty around federal tariffs on building materials as key reasons for the downturn in optimism.

This decline in confidence can lead to slower permitting, fewer project launches, and increased hesitancy around pricing strategy—all of which ripple through the real estate pipeline. For lenders, the cautious stance may translate to fewer new construction loans. For buyers, this means fewer new homes will come to market in the near term, especially in high-cost regions.

Attorneys and title agents working with clients on new developments should be mindful of these dynamics. Delays in construction, shifting pricing, or canceled contracts could complicate transactions. Additionally, professionals should be prepared for regional variation—some markets may remain strong despite the broader drop in builder morale, particularly where demand continues to outpace supply.

Permits and Completions: Indicators for the Second Half of 2025

Another key aspect of the May 2025 housing market was the divergence between permits and completions. Total housing completions rose 5.4% from April, reaching 1.526 million units. Single-family completions jumped by 8.1%, a hopeful sign for buyers waiting on new builds to be move-in ready. However, building permits—a leading indicator of future construction—fell 2.0% overall, with single-family permits down 2.7%.

This contrast suggests that while current projects are finishing up, fewer new ones are being greenlit. For realtors and brokers, the summer market may offer a brief boost in available inventory, but the fall and winter could bring a slowdown. Buyers looking to secure a newly constructed home should act quickly, while sellers with well-maintained listings may benefit from tighter competition.

From a legal and administrative standpoint, title companies and attorneys may experience a surge in activity as completions are pushed through to closings. It’s also a good time for clients to lock in rates and finalize contracts before uncertainty around future inventory and pricing deepens. For lenders and builders, the permit downturn underscores the need for strategic planning amid a less predictable construction pipeline.

What the May 2025 Housing Market Means for You

The May 2025 housing market sent a complex set of signals to those engaged in real estate. While the sharp drop in multifamily starts may seem alarming, the continued strength in single-family construction and increased completions suggest opportunity still exists, particularly for those willing to move swiftly and work closely with trusted professionals.

For homebuyers, it’s essential to monitor builder activity and act quickly on available inventory closely. Sellers should remain competitive on pricing, especially as newly completed homes enter the market. Lenders and brokers must navigate a narrower field of projects. At the same time, attorneys and title agents should prepare for continued demand on single-family closings, paired with occasional setbacks in new development timelines.

Whether you’re securing a home purchase, managing a sale, or coordinating a complex transaction, our experienced team provides the support and clarity you need from contract to closing. To learn more about the Chicagoland real estate market, contact the title insurance and escrow specialists at Plymouth Title Guaranty Corporation.