Dive Brief:
- Starts for buildings with five or more units dropped 6.2% year over year to a seasonally adjusted rate of 333,000 in August, according to a monthly report from HUD and the U.S. Census Bureau. However, they fell by 6.7% from July 2024.
- Developers pulled permits for a seasonally adjusted rate of 451,000 apartments in buildings with five units or more, a 16.8% YOY drop and an 8.4% increase compared to July 2024.
- Overall, housing starts came in at a seasonally adjusted annual rate of 1.4 million in August — a 6.5% decline YOY and a 4.9% increase versus July 2024. Single-family builders broke ground on 992,000 homes — a 5.2% YOY increase and 15.8% above July’s numbers.
Dive Insight:
Multifamily developers completed an annualized 740,000 apartments in buildings with five or more units in August, a whopping 79.2% YOY jump and a 36.5% decrease compared to July. At the end of July, 850,000 units were under construction, a 15.3% YOY decrease and a 3.2% month-over-month decline.
“On a three-month moving average basis, there are currently 1.8 apartments completing construction for every one that is beginning construction,” National Association of Home Builders’ Assistant Vice President of Forecasting and Analysis Danushka Nanayakkara-Skillington wrote on the association’s Eye On Housing blog.
So far in 2024, the completion rate of apartments in buildings with five or more units is up 36.7% YOY.
“A higher pace of completions in 2024 for multifamily construction will place some downward pressure on rent growth,” Nanayakkara-Skillington wrote.
The data mirrors what Memphis-based MAA's CEO Eric Bolton said on the REIT’s second-quarter earnings call in early August.
MAA was “in the midst of what’s clearly record levels of new supply coming into our market, and we kind of feel like we’re in the worst of the storm right now,” Bolton said. “We think that we’re seeing sort of bottoming out occurring as it relates to what’s happening with new lease pricing.”
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