Overall U.S. home construction declined in May due to a large drop in single-family construction paired with only a moderate increase in apartment building construction.
The Commerce Department released a May Report showing that construction origination decreased in most parts of the country. Construction origination decreased 45.5% in the Northeast, 8% in the Midwest and 2% in the West.
"Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers," said Robert Dietz, chief economist for the home builders.
The decrease of single-family home construction and increase of apartment building construction has been a growing trend. In April, single-family home construction decreased by 6.4% while apartment building construction increased by 10.9%.
However, economists believe that an aggregate construction rate surge will catch up with falling mortgage rates in the second half of the year despite current falling construction rates.