Multifamily Development Momentum Stalls

Seasonally adjusted (SA) multifamily permitting reached its peak in mid-2022, while the more reliable not seasonally adjusted (NSA) data indicates that permitting activity likely peaked closer to early 2023. Multifamily starts followed a similar trajectory, lagging permits slightly as projects progressed through the development pipeline. The difference in timing reflects the nature of the two datasets: SA figures are annualized and designed to capture forward-looking trends, while NSA figures represent the cumulative sum of actual monthly activity.

Following this peak development cycle, multifamily permitting and starts declined steadily, ultimately bottoming out in late 2024 to early 2025. Since then, both measures have begun to recover, although the pace of growth has been considerably more gradual than the rapid expansion seen during the previous upcycle.

More recently, momentum in multifamily construction activity has softened. The annualized SA multifamily permitting total declined 3.1% month over month in August to 467,000 units, though it remained 9.4% above year-ago levels. By comparison, the NSA permitting total increased a modest 0.3% during the month and was up 8.8% annually, reaching 480,200 units.

Multifamily starts exhibited a similar pattern. The SA annualized starts figure fell sharply, declining 22.5% from July and 15.5% from August 2025 to 344,000 units. The NSA starts total was more stable, slipping 1.4% month-over-month to 422,400 units while remaining 12.3% above year-earlier levels. Although multifamily permitting and starts continue to post solid year-over-year gains, growth has moderated significantly from the double-digit increases recorded earlier in 2026, suggesting the sector's recovery remains ongoing but has lost some momentum.

Multifamily completions continued to decline in August, with the SA rate at 302,000 units, down 15.9% from July and 35.7% for the year. Additionally, multifamily units under construction edged down 0.3% for the month and fell 2.5% from last August to 666,000 units. Another indicator of slowing momentum is the SA rate of multifamily units authorized but not started, which increased 0.8% from last month and a stark 15.3% from last year to 128,000 units, suggesting that some developers are delaying breaking ground amid challenging market conditions.

Elevated mortgage rates and persistent construction cost pressures remain headwinds for the single-family sector as annualized SA permitting dipped 1.8% from July to 878,000 units, although permitting activity remained modestly higher than a year ago, up 1.3%. Last month’s increase in single-family permitting translated into a 7.6% increase in single-family starts for the month and a 5.2% increase from last August to 918,000 units.

Single-family completions mirrored trends seen in the multifamily market, declining 10.4% from July and 22.9% from a year earlier to an annualized rate of 816,000 units. Meanwhile, the number of single-family homes under construction remained relatively stable on a monthly basis but was down 3.4% year over year at 589,000 units.

Compared to one year ago, the annual rate for multifamily permitting increased in all four regions, with only moderate improvement in the West (up 1.5% to 132,000 units) and the Midwest (up 4.8% to 66,000 units). The small Northeast region saw the largest increase of 20.9% in annual multifamily permitting to 64,000 units in August, followed by a 13.2% increase in the South to 206,000 units. Compared to the previous month, permitting was down in the Northeast and Midwest, up in the West and virtually unchanged in the South.

Annualized multifamily starts increased sharply in the Northeast region (up 54.5% to 47,000 units) and were basically unchanged in the West (up 1.2% to 122,000 units). The Midwest region’s multifamily starts decreased 40.7% to 52,000 units, while the South region saw starts decrease 26.9% to 124,000 units. Compared to July’s SAAR, starts were up strongly in the West and down in the remaining regions.