Dive Brief:

• Starts for buildings with five or more units rose dramatically in December, jumping 58.9% month over month — but dropping 11.3% year over year — to a seasonally adjusted rate of 418,000, according to a monthly report from HUD and the U.S. Census Bureau. 
• Multifamily developers completed an annualized 570,000 apartments in buildings with five or more units in December, a 9.4% YOY jump and a 1.7% month-over-month decrease. 
• The number of units being built continues to fall. At the end of December, 773,000 units were under construction, a 21.5% YOY drop and a 1.4% month-over-month decline. 

Dive Insight:

Despite December’s increase, multifamily starts are typically volatile, especially in the winter, according to a Linkedin post from Jay Parsons, head of investment strategy at Lubbock, Texas-based owner and operator Madera Residential.

“There is no such spike,” Parsons wrote. “It's just a methodology quirk resulting from how the Census annualizes ‘seasonal adjustments.’”

Overall housing starts came in at a seasonally adjusted annual rate of 1.5 million in December — only a 4.4% decrease YOY and a 15.8% increase versus November. In 2024, 1.4 million housing units were started in 2024, a 3.9% YOY decline.

Single-family builders broke ground on 1 million homes — a 2.6% YOY decrease and 3.3% above November’s numbers.

In December, apartment developers pulled permits for a seasonally adjusted rate of 437,000 apartments in buildings with five units or more, a 5.4% YOY decline and a 5.8% decrease compared to November.

With only a slight decline in permits, 2025 starts numbers could be fairly similar to 2024. That’s what Jim Schloemer, co-founder and CEO of Milwaukee, Wisconsin-based owner, operator and developer Continental Properties, expects this year.

“I'm still in the camp that [2025] will be similar to 2024, and we were able to finance a pretty substantial volume of business,” Schloemer told Multifamily Dive.

However, there could be more headwinds in the year ahead. In 2024, developers benefited from costs declining in the second half of the year, but Schloemer doesn’t expect more erosion in 2025.

“It's hard for me to imagine that we're actually going to see costs come down significantly from where they were in 2024,” he said.

Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.