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Dive Brief:
- Home for buildings with five or more units fell dramatically in Novemberdown 28.8% year over year and 24.1% month over month to a seasonally adjusted rate of 264,000, according to a monthly report from HUD and the US Census Bureau.
- Multifamily developers completed an annualized 544,000 apartments in buildings of five or more units in November, up 13.6% year-over-year and down 11.1% month-over-month. In comparison, completions increased by 61% YOY in October.
- At the end of November, 780,000 units were under construction, down 20.9% year-over-year and down 20.9% month-over-month. In October, 804,000 apartments were built.
Diving knowledge:
Overall, housing starts came in at a seasonally adjusted annual rate of 1.3 million in November, down 14.6% year over year and down 1.8% from October. Single-family home builders started building 1 million homes, down 10.2% year-over-year and 6.4% above October’s numbers.
In November, apartment developers pulled permits for a seasonally adjusted rate of 481,000 apartments in buildings of five units or more, a 22.1% year-over-year increase and a 4.8% increase from October.
The increase in permits could be a monthly rejection or a sign that the market is recovering.
For Ryan Davis, CEO of Witten Advisors, a Dallas-based firm that provides advisory services to apartment companies, 2025 still feels like the end of the cycle of new beginnings. After getting roughly 300,000 new units in 2024, expect developers to break ground on about 250,000 apartments by 2025.
However, some developers with access to capital are ready to start new projects as they see a sweet spot for new deliveries in 2026 and beyond.
“We really like the development opportunity right now,” said David Reynolds, president of investment management for Boca Raton, Florida-based apartment developer and owner Mill Creek Residential. “Broadly speaking, there’s just a general housing shortage.”
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