New residential construction activity decelerated sharply in the US last month, data released on Wednesday showed.

The drop — nearly 10% — would’ve been a lot easier to contextualize were it attributable to single-family starts, but the slowdown was concentrated in multi-family, which showed a 30% MoM decline. Multifamily’s a very noisy series, so I don’t want to over-interpret.

Caveats aside, I’d be remiss in this case not to parrot the gloomy assessment favored by a financial mediasphere which keeps the lights on by publishing recession fodder: The pace of headline starts is now the slowest since May of 2020, as illustrated below.

If you’re curious, consensus expected only a small decline from Wednesday’s readout.

The downshift comes at a time when home builders are struggling with the vexing realities of a gridlocked housing market, where buyers are beset by seven-handle mortgage rates and record-high prices.

Earlier this week, the NAHB’s gauge of builder moods crumbled, posting its third-worst result in a dozen years.

Bloomberg quoted Renaissance Macro’s Neil Dutta, who — and I’m paraphrasing here — said this isn’t rocket science: If completions are running ahead of starts, the read-across for residential investment isn’t great.

The figure above gives you some context for Dutta’s observation.

Although single-family starts held up ok in May, single-family permits fell almost 3%. The 898,000 annual rate was the slowest for that series since April of 2023. And the drop was the third consecutive.

Relatedly, the government’s tally of single-family units under construction fell a third month. It’s now ~200,000 below the peak in June of 2022 which, for reference, was a record in data back to 1970 if you exclude the run-up to the subprime bust.

All things considered, Wednesday’s data constituted a lackluster read on new construction in America, and it underscored the dour message from Tuesday’s snapshot of builder sentiment.