Multifamily Starts to Drop Nearly 30% as Sector Faces Headwinds: NAHB
Originally published on January 31, 2023, by Stephanie Pagan for the National Association of Home Builders.
Multifamily starts are predicted to fall in 2023, following an unsustainable high level of production last year, according to the National Association of Home Builders (NAHB). Meanwhile, the remodeling sector remains on solid ground and will do better than the single-family and multifamily markets in 2023.
Multifamily construction boomed in 2022, up an estimated 15% from the previous year and exceeded a 500,000 annual pace — the first time since the Great Recession. However, NAHB is projecting that multifamily starts will fall 28% this year to a 391,000 total and will stabilize in 2024 at about 374,000 starts.
“Slowing rent growth, rising unemployment, tightening commercial real estate financing conditions and a substantial amount of supply in the construction pipeline have caused a large backlog of multifamily developments,” said NAHB Assistant Vice President for Forecasting and Analysis Danushka Nanayakkara-Skillington at a press conference held during the NAHB International Builders’ Show in Las Vegas.
There are currently 943,000 apartments under construction, up 24.9% compared to a year ago (755,000). This is the highest count of apartments under construction since 1974.