Apartment Development Shows Signs of Slowing

The current wave of apartment development has begun to slow after peaking in 2022. Multifamily starts have decreased by double digits annually in 13 of the past 16 months, according to a RealPage multifamily permit update.

Annualized multifamily starts were down 4.5% in September from August and down 15.7% from September last year. Meanwhile, single-family starts were up 2.7% for the month despite recent increases in the 30-year mortgage rate, according to RealPage.

Annualized multifamily starts increased sharply in the Northeast region, up 183% to 84,000 units. Starts were down 45.3% in the West, 31.6% in the South and 21.3% in the Midwest.

Multifamily permitting fell nearly 11% month-to-month in September to 398,000 units. That is down more than 17% year-over-year. Single-family permitting was up slightly to 970,000 units, but still down 1.2% year-over-year. Multifamily permitting decreased in all four Census regions year-over-year, with the deepest decline in the West, which was down 26.7%.

Multifamily completions dipped 8.7% to 671,000 units in September. That was up almost 42% from last year, however. Single-family completions were down 2.7% for the month but up 1.6% for the year to one million units, according to RealPage.

Units under construction for multifamily fell 3.5% for the month and 16.8% for the year to 825,000 units. Single-family units under construction increased a slight 0.3% from August to 642,000 units but were down 4.5% from one year ago.

RealPage’s top 10 markets from August’s list returned in September, and the top five remained in place. Of the top 10 multifamily permitting markets, all but New York decreased their annual totals from the year before, some by a significant margin.

Most notably, New York tops the multifamily market with 31,381 units permitted, up 35% from last year and up 4.2% from August. Austin again came in second on the list with 16,639 units permitted, down 15% from last year but and fall of 5.2% from August. Phoenix remained in the No. 3 spot, with permits totaling 15,061 units for the year, down 23.3% annually and 9.3% drop month-over-month.

Atlanta and Dallas stayed in the 4th and 5th spots with 12,876 and 11,421 units permitted respectively. Both were down 2% to 3% from August, but Dallas has slowed by almost 10,000 units from last year’s permitting pace, said the report.

Rounding out the top ten were Washington, D.C., Tampa, Houston, Raleigh and Los Angeles.