Multifamily Activity Down 35% in Last Ten Months
Charlotte, NC, July 12, 2024-Truist has issued the following report on the multifamily market, “The decline in multifamily start activity has been ongoing since last year with a 35% decline the last ten months with indications that the build rate is going to an even lower level. Regionally, the most pressure has been felt in the South and West with the former a surprising result and a testament to overbuilding in the market. Completions have been positive, but are starting to decelerate, which, in our view should impact the market over the next 18 months.
“Starts for multi-family projects have seen substantial declines over the past year, averaging 35% y/y declines for the last ten months, which have been accelerating recently. The May starts result saw a nearly 52% y/y decline over the comparable month. Although 2022 stretched annual starts to the 500+ range seen in the 80s, we think this year finishes with less than 300 multi-family starts, a rate which has not been seen in the industry since 2013.
“The aforementioned booming multi-family starts are now flowing through to completions. Completions were up 22% in 2023 and are up 16% on a TTM [trailing 12 months] basis through May 2024. Broadly, this has resulted in a spike in unoccupied units and a drop in absorption rates from its 2021 spike. We do note, however, that these numbers are at or more favorable than the pre-pandemic numbers and vacancy rates are still low, so the underlying fundamentals for the multi-family industry do not appear to indicate a failing system.”