In response to strong demand and lack of inventory, homebuilders are currently focusing on single-family production over multifamily production, according to a recent report from the National Association of Home Builders (NAHB).
“While single-family construction expanded in the first quarter despite higher mortgage rates, multifamily construction for 2024 is experiencing a notable slowdown primarily because financing conditions are tight and there are more than 900,00 apartments under construction, near the highest rate since 1973,” explains Carl Harris, chairman of NAHB, in a statement. “This is the first time since the inception of the HBGI that all tracked multifamily geographic areas registered negative permit growth rates.”
“The strength in single-family construction at the start of the year was particularly concentrated in higher density areas, as return-to-office trends lifted demand in inner suburbs,” adds Robert Dietz, chief economist for NAHB. “This corresponds with other data indicating a gain for townhouse construction at the start of 2024. In contrast, the apartment construction slowdown is disproportionately affecting higher density markets, where high levels of construction inventory, elevated costs, and tight financing is impeding multifamily supply.”
Total single-family permits in the first quarter across the U.S. stood at approximately 240,500, which is 23.8% higher than the level in the first quarter of 2023 (194,200).
Photo: Annie Gray
