Single-Family Construction May Be Slowing, but Multifamily Starts Are on the Rise

Single-family home construction and multifamily apartment building slowed in September as total housing starts fell below the historical average of 1.5 million homes. Still, project delays and supply constraints have led to a sharp rise in the share of homes under construction, but as a market correction hinders new buyers, multifamily starts are easing, and single-family housing starts are 13% below the pre-pandemic historical average.

The number of single-family units under construction has declined consecutively for the last four months, while the number of multifamily units under construction has been on the rise for the last several years. New multifamily inventory could offset rising rental costs exacerbating an existing affordability crisis, especially as rental demand from would-be buyers continues to surge.

In addition, even more apartment buildings have begun construction. Although multifamily housing starts eased in September, the U.S. is building about 50% more than the pre-pandemic historical average. Nevertheless, our country continues to underbuild single-family homes. Yet the number of single-family housing starts is 13% below the pre-pandemic historical average. Thus, multifamily construction has made impressive gains during the last couple of years. While people are buying homes faster than they can be built, builders are turning to structures that can accommodate more people under one roof.

Read more