Dive Brief:
- Starts for buildings with five or more units declined 43.7% year over year to a seasonally adjusted rate of 290,000 in March, according to a report from HUD and the U.S. Census Bureau.
- Developers pulled permits for 433,000 apartments in buildings with five units or more in March, a 20.8% YOY drop. At the end of the month, 940,000 units were under construction, a 1.6% YOY decrease.
- Developers completed 502,000 apartments in buildings with five or more units in March, a 4.6% YOY increase. The pace of completions for apartments in buildings with five or more units is up 27.4% for the first quarter of 2024 compared to Q1 2023, National Association of Home Builders’ Assistant Vice President of Forecasting and Analysis Danushka Nanayakkara-Skillington wrote on the association’s Eye On Housing blog last week.
Dive Insight:
Overall, housing starts fell to 1.3 million in January, a 4.3% YOY decrease and 14.7% below the revised February total. Single-family builders started a little over 1 million units, a 20.8% decline compared to February and a 21.2% YOY increase.
The March starts numbers disappointed some observers.
“Housing starts fell in March with interest rates somewhat higher than expected last month as the latest inflation readings failed to show improvement,” Nanayakkara-Skillington wrote. “Builders are also still facing higher supply-side costs and tighter lending conditions.”
Multifamily developers face many of the same issues. Interest rates remain high, and costs aren’t moving as much as some builders would like.
Marc Padgett, president of Jacksonville, Florida-based Summit Contracting Group, told Multifamily Dive he saw some reductions in pricing last year and into 2024. “But I will tell you that we won't see the significant reduction that everybody is waiting for,” he said.
Still, Padgett has seen new business pick up in the first few months of 2024 compared to the same period the year before.
“Everybody has had to swallow the adjustment [in development prices], get used to it and get comfortable with it and realize that it's not going to change,” he said. “If it does change, it isn't going to be soon.”
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