Multifamily housing construction posted solid gains in March, but a sharp drop in permits suggests potential headwinds for future development activity, according to new federal data.
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New multifamily construction rose both month over month and year over year, based on the latest residential construction report released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The seasonally adjusted annual rate for buildings with five or more units reached 446,000 in March — a 13.5% increase compared to the same period last year and a 9.6% jump from February.
Single-family construction also showed strength, climbing to an annual rate of 1 million units. That figure represents a 9.7% increase from the previous month and an 8.9% gain year over year.
Overall, privately owned housing starts rose to a seasonally adjusted annual rate of 1.5 million in March, marking a 10.8% increase both from February and from March 2025 levels.
Regionally, the Northeast led growth in new residential construction, posting an 18.9% year-over-year increase. The South followed with a 14.1% gain, reflecting continued demand in key housing markets.
Despite the strong construction gains, permit data — a key indicator of future building activity — painted a more cautious picture.
Multifamily building permits fell to 427,000 in March, representing a 23.5% decline from February and a 5.3% drop compared to the same time last year.
Overall housing permits also declined, coming in at an annual rate of 1.37 million. That marks a 10.8% decrease from February and a 7.4% year-over-year decline. The South experienced the steepest drop, with permits falling 14% from last year.
The mixed signals reflect ongoing challenges in the housing market, particularly around affordability and financing conditions.
“New residential construction in February and March underscored the challenges of the current housing market, where builders are walking a precarious line to meet the need for more affordable supply within the constraints of rising inflation and interest rates,” said George Ratiu, vice president of research at the National Apartment Association.
“Home builder sentiment has been in the doldrums for a year, as slow foot traffic and sales push almost two-thirds of construction companies to offer sales incentives,” Ratiu added.
Multifamily completions reached a seasonally adjusted annual rate of 452,000 units in March. That figure is up 10.2% from February but down 9.1% compared to last year.
Overall residential completions remained relatively flat month over month at 1.37 million units but declined 12.8% year over year.
Regional performance varied significantly. While completions surged 75.9% in the Northeast compared to last year, other regions experienced declines, reflecting uneven market conditions across the country.
The data highlights a housing market balancing strong near-term construction activity with growing uncertainty about future development, as builders navigate higher costs, financing pressures and fluctuating demand.
Originally reported by Julie Strupp, Senior Editor in Construction Dive.
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