Dive Brief:
- Starts for buildings with five or more units dropped 23.4% year over year to a seasonally adjusted rate of 360,000 in June, according to the monthly report from HUD and the U.S. Census Bureau. However, they increased by 22% from May 2024.
- Developers pulled permits for a seasonally adjusted rate of 460,000 apartments in buildings with five units or more, a 6.5% YOY drop. However, June’s numbers were a 19.2% increase compared to May 2024.
- Overall, housing starts came in at a seasonally adjusted annual rate of 1.4 million in June — a 4.4% decline YOY and a 3% increase versus May 2024. Single-family builders broke ground on 980,000 million homes — a 5.4% YOY increase and 2.2% below May’s numbers.
Dive Insight:
For many apartment owners and developers, new supply continues to be one of the biggest near-term threats. At the end of June, 880,000 units were under construction, an 11.4% YOY decrease.
Multifamily developers completed a whopping 656,000 apartments in buildings with five or more units in June, a 40.2% YOY jump and a 26.2% increase compared to May 2024.
However, developers with a longer-term time horizon still see an opportunity. Charleston, South Carolina-based apartment developer Woodfield Development started ten new projects last year and is on track for just as many this year, according to Greg Bonifield, founding partner at the company.
“Even the markets that feel a little overbuilt right now look really good within 18 months at most,” Bonifield told Multifamily Dive. “So we're taking the approach that now is a good time to get shovels in the ground and start new projects.”
The slowdown in starts has helped Woodfield as it underwrites new projects. Although land sellers aren’t necessarily providing discounts, their terms are more flexible. In addition, labor costs are starting to fall.
“We're finally seeing some movement on pricing,” Bonifield said. “We're starting to get subcontractors to sharpen their pencils and make the pricing so we can get the deals to underwrite.”
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