Dive Brief:
- Starts for buildings with five or more units fell dramatically in November, dropping 28.8% year over year and 24.1% month over month to a seasonally adjusted rate of 264,000, according to a monthly report from HUD and the U.S. Census Bureau.
- Multifamily developers completed an annualized 544,000 apartments in buildings with five or more units in November, a 13.6% YOY jump and an 11.1% month-over-month decrease. By comparison, completions jumped 61% YOY in October.
- At the end of November, 780,000 units were under construction, a 20.9% YOY decline and a 20.9% month-over-month decline. In October, 804,000 apartments were being built.
Dive Insight:
Overall housing starts came in at a seasonally adjusted annual rate of 1.3 million in November — a 14.6% decrease YOY and a 1.8% drop versus October. Single-family builders broke ground on 1 million homes — a 10.2% YOY decrease and 6.4% above October’s numbers.
In November, apartment developers pulled permits for a seasonally adjusted rate of 481,000 apartments in buildings with five units or more, a 22.1% YOY jump and a 4.8% increase compared to October.
The increase in permits could be a monthly blip or a sign that the market is picking up.
For Ryan Davis, CEO of Witten Advisors, a Dallas-based firm that provides apartment companies with advisory services, 2025 still looks like the bottom of the cycle for new starts. After hitting roughly 300,000 new units in 2024, he expects developers to break ground on roughly 250,000 apartments in 2025.
However, some developers with access to capital are ready to start new projects as they see a sweet spot for new deliveries in 2026 and beyond.
“We like the development opportunity a lot right now,” said David Reynolds, president of investment management at Boca Raton, Florida-based apartment developer and owner Mill Creek Residential. “There’s just, broadly speaking, an overall shortage of housing.”
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