Dive Brief:

• Starts for buildings with five or more units fell 11% month over month in January but rose 2.3% year over year to a seasonally adjusted rate of 355,000, according to a monthly report from HUD and the U.S. Census Bureau. 
• Completions continued to rise in January as multifamily developers finished an annualized 652,000 apartments in buildings with five or more units, an 11.8% YOY jump and a 10.1% month-over-month decrease. 
• At the end of January, 751,000 units were under construction, a 22.5% YOY drop and a 2.1% month-over-month decline. 

Dive Insight:

Overall housing starts came in at a seasonally adjusted annual rate of 1.4 million in January — a 0.7% decrease YOY and a 9.8% increase versus December. 

Single-family builders broke ground on 993,000 million homes, which was a 1.8% YOY decrease and 8.4% below January’s numbers.

The pipeline for new multifamily was fairly steady in January. Apartment developers pulled permits for a seasonally adjusted rate of 427,000 apartments in buildings with five units or more, a 0.2% YOY increase and a 1.4% decrease compared to December.

Smaller apartment developers may be having trouble putting deals together this year, but REITs are signaling that they’re ready to start their construction engines.

Memphis, Tennessee-based REIT MAA, which had seven communities under development in the fourth quarter of 2024, maintains an active development pipeline of around $1 billion. It expects to make $250 million to $350 million in development investments for the year.

“Certainly, development is one of the best uses of capital that we have today, especially given what we think will be a diminished supply pipeline going forward,” said MAA President and Chief Investment Officer Brad Hill on the REIT’s Q4 earnings call. “And it takes time to really build that pipeline. Two years ago, that pipeline was at about $450 million, and today, it's close to $900 million — where we want to keep it.”

However, Hill mentioned that President Donald Trump's immigration crackdown could slow development this year, even for the companies that can fund new projects.

“Clearly, that would have an impact on the ability of the market really to ramp up new construction for us,” Hill said.

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