With the Federal Reserve beginning an easing of monetary policy and builder sentiment improving, single-family starts posted a modest gain in September. Multifamily construction continued to weaken due to tight financing and an ongoing rise in completed apartments, according to the National Association of Home Builders (NAHB).

Overall housing starts decreased 0.5% in September to a seasonally adjusted annual rate of 1.35 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. 

The September reading of 1.35 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.7% to a 1.03 million seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 10.1%. The multifamily sector, which includes apartment buildings and condos, decreased 9.4% to an annualized 327,000 pace, marking the weakest pace since May.  

“Single-family construction increased in September, mirroring NAHB’s survey of builder confidence,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and custom home builder from Wichita, Kansas. “In the long run, the most effective way to tackle the nation’s housing affordability crisis is to increase the housing supply. And as the election looms, policymakers need to be focused on the supply-side of the market to let builders build.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 9.0% higher in the Northeast, 2.0% lower in the Midwest, 4.6% lower in the South and 5.4% lower in the West.

Overall permits decreased 2.9% to a 1.43 million unit annualized rate in September. Single-family permits increased 0.3% to a 970,000 unit rate. Multifamily permits decreased 8.9% to an annualized 458,000 pace. 

Looking at regional data on a year-to-date basis, permits are 0.8% higher in the Northeast, 2.6% higher in the Midwest, 2.2% lower in the South and 5.1% lower in the West.

The number of single-family homes under active construction totaled 642,000 in September. After stabilizing recently, this is down just 4.5% from a year ago. The number of multifamily units under construction declined 3.4% in September to an 842,000 total. This is 16.5% lower than a year ago and is the smallest count since February 2022.

As a sign of the reversal for multifamily construction, the seasonally adjusted annual rate of multifamily construction was 680,000 in September. This was roughly twice the pace of multifamily starts, meaning for every two apartments finishing construction, only one new unit began construction. The pace of multifamily completions was up 41% compared to a year ago.

Additional details are available at www.nahb.org.