Apartment Developers Squeeze in Late Projects to Close 2023

It looked like multifamily developers were maybe trying to squeeze in one more project to close out the calendar year, according to a new report from RealPage analyst Chuck Ehmann.

While permitting continues to trend lower, the seasonally adjusted annual rates (SAAR) for both multifamily permitting and construction starts ticked up to end 2023, according to RealPage data.

The December SAAR for multifamily permits increased 1.4% from November’s rate to 449,000 units and the annualized rate for multifamily starts jumped 7.5% from last month to 417,000 units, Ehmann reported.

Both series were below last year’s rates with permitting down 26.6% from last December and starts down 9.5%.

The SAAR for single-family permitting presented a different story. It was up slightly (1.7%) from November and 32.9% higher than last year at 994,000 units.

Single-family starts fell 8.6% from November’s annual rate to 1.027 million units but were up 15.8% from last December.

Housing in most forms continues to surge on an annualized basis. RealPage’s numbers also show that completions of multifamily units (by 33.6%) and single-family homes (6.1%) increased, and multifamily units under construction (7.4%) was also up compared to a year ago.

However, the number of multifamily units authorized but not started was down 11% at 121,000 units in December and down 18.8% from one year ago.

Compared to one year ago, the annual rate for multifamily permitting decreased in all four Census regions, with the deepest decreases in the West (down 43.9% to 93,000 units) and Northeast (down 29.9% to 37,000 units) regions, while the South (down 19.8% to 254,000 units) and Midwest (down 15.3% to 65,000 units) regions had more moderate declines, according to RealPage.

Austin is the new market leader when it comes to units permitted in 2023, edging New York City, a position NYC held the past few years.

Phoenix slipped one spot from last month to No. 3 in December, slightly higher than the market’s total last year.

Dallas held its No. 4 position followed by Houston, but both were down 30% to 40% from their totals for last year. Atlanta stayed as the No. 6 market, but its permitting fell 30% in 2023 compared to the year earlier.

Los Angeles returned at the No. 7 spot and Raleigh/Durham moved up to No. 8 (from 10th). Washington, DC slipped one spot to No. 9 and Denver cracked the top 10.

RealPage listed other major non-top 10 markets with significant declines in permitting as Seattle (-7,272 units), San Antonio (-6,210 units), Minneapolis/St. Paul (-5,774 units), Orlando (-3,747 units), Fort Worth (-3,724 units), Tampa (-3,285 units) and Boston (-3,273 units).

It said that major markets with significant year-over-year increases in annual multifamily permitting in the year-ending December were Nashville (+6,414 units), Riverside (+3,671 units), Greensboro/Winston-Salem (+2,694 units), San Diego (+2,509 units) Miami (+2,246 units) and Charlotte (+2,133 units).