The U.S. multifamily housing market experienced a surprising dichotomy in November 2024, with a surge in permitting activity contrasted sharply by a plunge in construction starts. As the latest data from the U.S. Census Bureau and HUD reveals, this divergence underscores the complexities facing developers in a market shaped by shifting demand, regional disparities, and economic uncertainties.
Permitting Soars Despite Market Challenges
In November, the annualized rate for multifamily permits issued surged 22.1% month-over-month to 481,000 units, marking a 4.8% year-over-year increase. While this jump suggests renewed confidence among developers, it’s important to note that seasonally adjusted figures often exhibit volatility. The not seasonally adjusted 12-month moving total for multifamily permits tells a different story, showing a negligible increase from October and a sharp 22% decline compared to last year.
This divergence reflects the nuanced reality “on the ground,” where regional and market-specific factors play a pivotal role. For instance, the Northeast saw a dramatic 91.2% year-over-year increase in annualized multifamily permitting, reaching 87,000 units. In contrast, the West experienced a steep 32.7% decline to 106,000 units. The South, a traditionally strong multifamily region, managed a modest 9% increase to 212,000 units, while the Midwest rose 23.6% to 76,000 units.
Starts Take a Significant Hit
While permitting surged, multifamily starts plummeted. The seasonally adjusted annual rate (SAAR) for multifamily starts dropped 24.1% from October to 264,000 units, a staggering 28.8% year-over-year decline. The not seasonally adjusted figures painted an equally grim picture, with starts down almost 31% month-over-month to 336,100 units and 26.5% compared to last November.
Regionally, the Northeast bucked the trend with a 21.9% increase in annualized multifamily starts to 66,000 units. However, the South, Midwest, and West all reported significant declines, with drops of 44.2%, 29.1%, and 27.8%, respectively. The data reflects growing hesitancy among developers to break ground amidst rising construction costs, labor shortages, and ongoing economic headwinds.
Metro-Level Trends: New York Leads, Texas Remains a Hotspot
At the metro level, New York City once again topped the charts for multifamily permitting, issuing 34,000 units over the 12 months ending in November. This marks one of only two top 10 markets to increase annual permitting from the previous year. Austin and Phoenix secured the second and third spots, despite both experiencing significant declines in permitting activity.
Atlanta and Dallas competed closely for the fourth spot, with both cities permitting roughly 12,600 units. Fort Worth and Miami joined the top 10, displacing Tampa and Raleigh/Durham. Fort Worth saw a notable year-over-year increase of more than 3,500 units, reflecting strong regional demand.
Other markets with significant year-over-year permitting increases included Omaha (+2,027 units), Asheville, NC (+2,011 units), and Boston (+1,904 units). Conversely, some markets saw steep declines, such as San Antonio (-4,980 units), Jacksonville (-4,935 units), and Riverside, CA (-4,823 units), highlighting regional disparities in development activity.
Completion Rates and Construction Activity
While starts lagged, completions offered a silver lining. The SAAR for multifamily completions rose 13.6% year-over-year to 544,000 units, signaling progress on previously delayed projects. However, the number of multifamily units under construction fell 20.9% year-over-year to 780,000 units, reflecting developers’ caution in committing to new projects.
Single-family housing also showed mixed signals. Permits and completions rose slightly, but starts remained relatively flat compared to October. Developers in this segment appear to be navigating similar challenges, including higher interest rates and evolving consumer demand.
Key Takeaways for Developers and Investors
The November multifamily data underscores the complexities of today’s housing market. Developers appear cautiously optimistic, as evidenced by the permitting surge, but are also wary of breaking ground amidst rising costs and economic uncertainty. The regional and metro-level trends further highlight the importance of location-specific strategies.
For investors, the permitting surge may signal a pipeline of future opportunities, but the sharp drop in starts suggests that patience will be key. Monitoring local market conditions and regulatory environments will be critical to navigating this turbulent period. Additionally, the rise in completions offers a glimpse of relief for markets struggling with supply shortages, particularly in high-demand areas.
The Road Ahead
As the multifamily market moves into 2025, several factors will shape its trajectory. Economic conditions, interest rates, and construction costs will continue to influence developer confidence and activity. Meanwhile, regional disparities in permitting and starts will likely persist, driven by local demand and regulatory environments.
While the permitting surge in November offers a glimmer of optimism, the drop in starts underscores the challenges ahead. For developers and investors alike, adaptability and a keen understanding of market dynamics will be essential to navigating the year ahead.
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