• Multifamily housing starts for buildings with five or more units dropped by 31.8% year over year to 382,000 in October.
• Developers pulled permits for 469,000 units in these buildings, a 27.8% year-over-year decline.
• However, 408,000 units were completed in the same month, showing a 14.3% year-over-year increase.
• Overall housing starts in October reached 1.4 million, down 4.2% year over year.
• Housing permits came in at 1.5 million, reflecting a 4.4% year-over-year decrease.
• Single-family home starts and authorizations saw significant year-over-year increases of 13.1% and 13.9%, respectively.

On the multifamily front:

• Despite the recent slowdown, the multifamily housing market is expected to see a surge in apartment deliveries in 2024 and continued strength in 2025.
• This increase in supply is already causing issues for existing property owners, particularly in Sun Belt markets like Austin, Texas, and Tampa, Florida.
• Rising competition has led to a 4% to 5% year-over-year drop in new lease pricing for major apartment REITs.

Looking ahead:

• Yardi Matrix predicts 487,512 new unit deliveries in 2023 and another 536,145 in 2024.
• They anticipate a mild recession starting in late 2023 or early 2024 due to various economic factors, tight financing conditions, and a high level of new supply.
• This recession could lead to a slowdown in new construction activity in the latter part of 2023 and throughout 2024.

One potential positive aspect:

• As construction activity decreases, costs may eventually decrease for companies that can finance new developments.

Stay informed as these trends continue to evolve in the real estate market. Knowledge is key when it comes to real estate investing!