In January, Census Bureau data showed a significant decline in multifamily construction starts, reaching the lowest level since the start of the pandemic. The overall drop of 14.8% was largely driven by a 35.6% decrease in apartment construction, while single-family starts experienced a smaller decline.
TD Bank economist Andrew Foran notes that fluctuations in multifamily construction are common and expected after December’s strong reading (which has been revised higher by 75,000 units). However, this segment is facing challenges such as high financing costs and slower rent price growth. Additionally, there is an accumulation of projects under construction from previous years.
According to National Association of Realtors chief economist Lawrence Yun’s statement on the matter: “The rise in apartment vacancies can be attributed to an oversupply of constructions over the past three years rather than fewer renters.” As a result, developers are temporarily scaling back their efforts.
This recent report highlights how multifamily construction starts have plunged nearly 36% compared to last month’s figures.
