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Dive brief:
- Home for buildings with five or more units it dropped 12.6% year-on-year at a seasonally adjusted rate of 326,000 in October, according to a monthly report from HUD and the US Census Bureau. They increased by 9.8% compared to September.
- Multifamily developers completed about 615,000 annualized apartments in buildings of five or more units in October, a 61.4% year-over-year increase and a 9% decrease compared to September.
- At the end of October, 804,000 units were under construction, down 19.2% year-over-year and down 3.5% month-over-month.
Diving knowledge:
The decline in multifamily starts has been dramatic, now down to the lowest level since 2013, according to Jay Parsons, chief investment strategist at Lubbock, Texas-based Madera Residential. In a LinkedIn post, he noted that empty from start to finish is at its highest level since 1974.
However, housing starts overall did not post significant declines, falling to a seasonally adjusted annual rate of 1.3 million in October, a 4% year-over-year decrease and a 3.1% decline compared to September. Single-family home builders started construction of 970,000 homes, down 0.5% year-over-year and 6.9% below September numbers.
Developers withdrew permits for a seasonally adjusted rate of 393,000 apartments in buildings of five units or more, a 20.9% year-over-year drop and a 3% decrease from September.
While new starts are slow for private developers, some apartment REITs expressed optimism about the start of new projects in the recent round of third-quarter earnings calls.
“We have a capital advantage relative to our private sector competitors,” Ben Schall, CEO of Arlington, Va.-based AvalonBay Communities, said on the REIT’s third-quarter earnings call.
AVB started four projects, two in North Carolina and two in Texas, and is looking for more innovations in 2025.
“We could certainly see our start-up activity increase next year to something on either side of the $1.5 billion range, up from $1.05 billion this year,” said Matthew Birenbaum, chief investment officer of AvalonBay Communities, on the call.
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