Multifamily Starts Fell 15.5% in August, Census and HUD Report

Multifamily starts fell 15.5% year over year in August to a seasonally adjusted rate of 344,000 units, according to the latest residential construction report from HUD and the U.S. Census Bureau, released Thursday.

The decline was even sharper month over month: starts for buildings with five units or more dropped 22.5% from July. Total privately owned housing starts stood at a seasonally adjusted rate of 1.28 million, down 1.2% from August 2025 and 2.6% from July.

Single-family construction told a different story, reversing July's trend. Single-family starts hit 918,000, up 5.2% year over year and 7.6% above July's figure.

Far fewer new apartments came online in August — likely welcome news for operators still working through lease-up. Multifamily completions ran at a seasonally adjusted rate of 302,000, down 35.7% from the previous year and 15.9% below July.

Multifamily permits, a forward indicator of construction activity, stood at a seasonally adjusted rate of 467,000. That figure is 9.4% higher than a year ago but 3.1% lower than July.

Regional splits

The West posted the strongest performance, with overall housing starts up 5.2% year over year. The Northeast was flat overall, but its single-family starts fell 27%, suggesting much of the region's building activity was apartments.

The Midwest saw the steepest decline: overall starts dropped 10.8% year over year, even as its single-family sector gained. Starts in the South ticked down 1.2% year over year, while single-family activity rose 7.5%.

Midwest developers face growing underwriting challenges as rent growth moderates, according to Jay Lybik, senior director of market research at Continental Properties, headquartered in Menomonee Falls, Wisconsin.

"Rent growth is still positive and the outlook is good but in many cases rent growth forecasts are now below the current rate of inflation," Lybik told Multifamily Dive in emailed comments.

Lybik said permitting approvals in the Midwest were never easy, and new obstacles have emerged.

"With high anti-development movements rising to stop construction of data centers, some of that negative sentiment has transferred to multifamily," Lybik said. "There are countless cities and townships across the Midwest that have enacted residential building moratoriums further limiting places that multifamily developers can then build new properties."

Materials costs squeeze builders

Lot and labor shortages are constraining homebuilders as they confront rising construction costs in an uncertain economic environment, according to the National Association of Homebuilders.

"Higher mortgage rates, rising construction financing costs and affordability challenges continue to weigh on the market and limit momentum for new-home construction," NAHB Chairman Bill Owens said in a Thursday release.

Construction input prices rose slightly in August and now sit 8.9% above the same period last year, according to an analysis of U.S. Bureau of Labor Statistics data by Associated Builders and Contractors.

Many key building materials saw year-over-year price increases of 10% or more last month — including switchgear, iron, steel, softwood lumber, copper wire and several derivative metal products — prompting more developers to halt projects, Construction Dive reported.

Lybik said development in current market conditions is simply difficult. Ten-year interest rates at or near 5% are pushing up lending costs and, potentially, dragging down valuations.

"If the Census data showed 5+ starts declining over the next four months of the year I would not be surprised," Lybik said. "And actually I would be happy because then the data would be accurately reflecting the market conditions developers are experiencing."