US Housing Starts Ease as Multifamily Construction Declines

The US housing market has witnessed a significant shift in recent months, with a decline in multifamily construction contributing to a slowdown in overall housing starts. According to data released by the US Census Bureau, housing starts decreased by 0.5% in September 2024, reaching an annualized rate of 1.35 million units. This decline can be attributed primarily to a 9.4% drop in multifamily starts, which offset a 2.7% increase in single-family home construction.


The decrease in multifamily starts is likely to have a significant impact on rental prices and housing availability in major cities. With fewer new apartments being built, the supply of rental units may not keep pace with demand, leading to increased competition and higher rents. This could exacerbate affordability issues in urban areas, where housing costs are already high.


Several factors are driving the decline in multifamily construction. Tight lending conditions and the high cost of development loans are making it more challenging for developers to finance new projects. Additionally, a shortage of skilled labor is making it difficult for construction firms to complete projects on time and within budget. Addressing these issues will be crucial for boosting affordability in the multifamily sector.

Policy initiatives and incentives could help stimulate multifamily construction and improve affordability in urban areas. For example, tax credits or other financial incentives could make it more attractive for developers to build affordable housing. Additionally, investing in workforce development programs could help address the labor shortage in the construction industry.

The slowdown in multifamily construction may also influence the demand for single-family homes and the overall housing market. As rental prices increase, some renters may choose to purchase homes instead, driving up demand for single-family properties. However, the overall housing market may experience a slowdown if affordability issues persist and potential buyers are priced out of the market.

In conclusion, the decline in multifamily construction is having a significant impact on the US housing market, with potential consequences for rental prices, housing availability, and affordability. Addressing the factors driving this decline and implementing policy initiatives to stimulate multifamily construction will be crucial for maintaining a healthy and balanced housing market.