Single-Family Development Remains Constrained
Don't expect single-family construction to accelerate anytime soon. Consumer and builder confidence has weakened, while mortgage rates, financing costs, construction expenses, labor costs and regulatory hurdles continue to weigh on development activity. At the same time, ongoing affordability concerns and elevated home prices are limiting housing demand.
Single-family housing starts surged above 1.3 million units on a seasonally adjusted basis during the post-pandemic period of exceptionally low mortgage rates. As borrowing costs climbed and mortgage rates moved above 7%, housing starts fell to roughly 800,000 units by late 2022. Annualized starts activity later recovered to more than one million units before gradually easing back toward 900,000 units in 2026. With mortgage rates averaging roughly 7.4% in October, pressure on the single-family sector is likely to persist.
September’s seasonally adjusted rate for single-family starts was 859,000 units, down 4.6% from August’s revised rate but up 2.6% from one year ago. Annualized single-family permits fell 4% from August and 4.8% from last September to a 3.5-year low of 845,000 units.
The number of single-family homes currently under construction was unchanged month-to-month at 587,000 units, but that annualized rate was down 2.8% from last September. Single-family completions dipped 2.4% for the month but fell 11% from one year ago to 840,000 units, while units authorized, but not started jumped 6.3% from last year to 151,000 units, the same rate as last month.
Meanwhile, multifamily development faces similar headwinds with the seasonally adjusted starts rate at 349,000 units, down 7.2% from August and 25.9% from last year. Annualized multifamily permitting increased 5.9% for the month and 1% for the year to 503,000 units. Reflecting the volatility of the seasonally adjusted data series, the unadjusted annual starts and permits totals for multifamily were both up close to 7% from last September.
Like the single-family series, the annualized rate of multifamily units under construction was unchanged for the month at 677,000 units, however, that was down 3.1% for the year. Authorized multifamily units that were not started were also unchanged for the month at 123,000 units but were up 13.9% for the year. Multifamily completions rose 14.9% from August to 339,000 units but were down 20.4% for the year.
Compared to one year ago, the annual rate for multifamily permitting increased in two of the four regions, with moderate improvement in the Northeast (up 8.5% to 83,000 units) and solid growth in the Midwest (up 32.8% to 79,000 units). The West region saw the deepest decrease of 17% in annual multifamily permitting to 100,000 units in September, followed by a very modest 0.2% decrease in the South to 241,000 units. Compared to the previous month, permitting was down in the West and up in the remaining regions.
Annualized multifamily starts decreased sharply in three regions: the West (down 56.7% to 48,000 units), the Midwest (down 54.4% to 35,000 units) and the Northeast (down 43.5% to 62,000 units). The South region’s multifamily starts increased 16.8% to 205,000 units. Compared to August’s seasonally adjusted annual rate, starts were up strongly in the South and down in the remaining regions.
