Apartment construction activity showed mixed signals in August, with new starts climbing while completions continued to fall sharply, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development.
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The number of apartment starts in buildings with five or more units rose 15.8% year over year in August, reaching a seasonally adjusted annual rate of 403,000 units. However, compared to July, multifamily starts declined 11%. Developers also pulled permits for 403,000 apartments, a 10.8% drop from last year and 6.7% lower than July.
Overall U.S. housing starts hit an annualized 1.3 million units in August, down 6% year over year and 8.5% from July. Single-family starts saw sharper declines, falling 11.7% YOY to 890,000 homes.
By the end of August, about 686,000 apartments were still under construction, a 20.2% YOY drop and 1% below July. Meanwhile, completions fell more dramatically: 503,000 apartments were delivered in buildings with five or more units, a decline of 28.7% from last year—though completions did increase 10.8% from July.
These sharp declines in deliveries are being closely watched by apartment operators and developers who see them as a potential tailwind for rents.
“We were starting to feel, I guess, better about the supply numbers,” said Greg Willett, chief economist at Dallas-based lease insurance provider LeaseLock. “The fourth quarter looks like it’s going to be the first quarter in two and a half years when fewer than 100,000 units get delivered.”
For developers, this dwindling pipeline could mean stronger market fundamentals ahead. Brian Austin, chief operating officer – East for Scottsdale, Arizona-based Alliance Residential, noted: “On a national basis, it’s obvious that the supply is dwindling down. The deliveries are declining.”
Austin said he expects development activity to remain muted through the end of 2025, but hopes financing conditions will improve in early 2026.
“I think after the first of the year, we’re hopeful that capital will re-engage and increase their appetite for development,” Austin said.
Still, Austin is optimistic about projects already moving forward.
“Those deals that we’re able to get done will be the most successful deals that we do, just because we’ll be hitting the market with these deals when there’s a dwindling supply,” he said. “You’re going to see rent growth and that.”
Labor market conditions have also improved for builders compared to the height of the construction boom.
“Since there’s not a lot of new construction, we will be able to get better pricing from our subcontractors and a better basis on those deals,” Austin said.
The mixed August results illustrate the broader tension in the multifamily market: starts are stabilizing, but completions are shrinking. For renters, fewer deliveries could mean tighter supply and rising rents in the months ahead, while for developers, reduced competition may create opportunities for the next wave of projects.
Originally reported by Leslie Shaver in Multifamily Dive.
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