Multifamily construction starts experienced a sharp decline in November, dropping by 28.8% year over year and 24.1% month over month, reaching a seasonally adjusted rate of 264,000 units, according to a report from HUD and the U.S. Census Bureau. Despite this, apartment completions saw a 13.6% increase year over year, although this was a noticeable slowdown compared to the 61% year-over-year surge in October.

In total, developers completed 544,000 apartments in buildings with five or more units in November, representing an 11.1% decrease compared to the previous month. At the close of November, 780,000 units remained under construction, marking a 20.9% year-over-year drop and a 20.9% decrease from October’s total of 804,000 units.

The broader housing market also showed signs of slowing down, with overall housing starts dropping to a seasonally adjusted annual rate of 1.3 million in November, reflecting a 14.6% year-over-year decline. Single-family construction, however, showed a modest increase, with builders starting 1 million homes, up 6.4% from October despite a 10.2% year-over-year decrease.

A more positive development came from apartment developers, who pulled permits at a seasonally adjusted rate of 481,000 apartments in November, representing a 22.1% year-over-year increase and a 4.8% rise compared to October. This uptick in permits could either be a short-term spike or an indication of an improving market.

For Ryan Davis, CEO of Witten Advisors, the outlook for 2025 remains cautious, with a projected 250,000 new apartment units expected to break ground, down from around 300,000 units in 2024. However, some developers with ample capital are eyeing new projects, seeing a potential opportunity in the coming years.

“We like the development opportunity a lot right now,” said David Reynolds, president of investment management at Mill Creek Residential. “There’s just, broadly speaking, an overall shortage of housing.”