- In 2024, there were 1.37M housing starts, marking the 11th consecutive year of surpassing 1M.
- Multifamily completions reached 588K units in 2024, the highest since 1974. However, multifamily starts dropped 36% from 2022 peaks.
- Single-family starts rose 6% YoY, totaling over 1M, but this could exacerbate the growing unsold inventory.
- The US housing supply gap is estimated to be between 3.4M to 3.7Munits, potentially favoring multifamily and rental owners in the short term.
A shift in housing starts could be good news for multifamily and single-family or build-to-rent owners, according to new data from Colliers, per GlobeSt.
The CRE firm analyzed various sources, including the US Census, Department of Housing and Urban Development (HUD), Zillow, Freddie Mac, and Green Street.
By The Numbers
In 2024, multifamily unit completions hit 588K, the highest figure since 1974, signaling increased supply in the rental market. In contrast, single-family home completions have remained steady since 2022 but have been on a downward trajectory since 2021.
Despite a dip in multifamily starts last year, there were 1.37M housing starts in total, marking the 11th consecutive year with over 1M starts. However, the real shift is balancing multifamily and single-family home construction.
Relief For Multifamily Owners
Multifamily housing starts fell to 337K units in 2024, a sharp 36% decline from the 2022 peak. This reduction in multifamily projects could help relieve some pressure on inventory growth and lower vacancy rates.
The fewer available new units should give multifamily owners the chance to regain some pricing power that was lost when oversupply pushed rents down.
Additionally, the decreased number of multifamily starts aligns with broader industry trends, allowing property owners to stabilize rents and maintain occupancy rates without the same levels of competition from new units entering the market.
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More Inventory, Less Affordable
On the other hand, single-family home starts increased by 6% YoY, reaching over 1M. However, this surge adds to the growing unsold inventory, particularly as affordability remains a pressing issue. High home prices and mortgage rates are pushing more people into the rental market.
A recent report by Realtor.com highlighted that in only two US metros, buying a home is cheaper than renting. This affordability gap is expected to widen in 2025, according to Redfin’s predictions.
Potential buyers find homeownership particularly challenging, but developers of single-family homes may be stuck with unsold inventory. Since the pandemic, the costs of final delivery for commercial construction have risen by over 40%, mounting pressure on developers.
Single-family rental owners might benefit if developers cannot sell homes quickly enough to meet profitability targets, expanding their portfolios in the process.
The Bigger Picture
Despite these trends, the broader housing market remains in flux. Colliers’ research director, Aaron Jodka, noted that the gap in housing supply remains substantial. Zillow estimates a shortage of 3.4M units, while Freddie Mac (FMCC) puts the number closer to 3.7M.
Regardless of the exact figure, the housing gap creates a precarious situation with fewer multifamily starts, more single-family homes entering the market, and an increasing number of renters who are struggling to find affordable homes.
In the short run, this dynamic may favor multifamily and build-to-rent owners, but it raises the question of whether the overall housing market will stabilize. Much depends on the financial stability of renters, especially as rent prices climb in response to supply shortages.
