A new report from Institutional Property Advisors—Pullback in Multifamily Construction Starts— shows a second-quarter slowdown in building activity. According to the report, the downturn was expected with harder-to-find capital from banks of all sizes.
“As access to development capital across the country diminishes and rent growth slows, multifamily starts are cooling,” said Greg Willett, First Vice President and National Director, Research Services with IPA, in a release. “Among the 15 markets that account for over half of the nation’s ongoing apartment construction, building starts in the second quarter of 2023 totaled just under half the average volume recorded during the previous two years.”
Construction in those 15 markets reached 30,800 units in Q2, off the typical pace of more than 64,000 units seen in the nine quarters from early 2021 to early 2023. The starts peak was from April through June 2022 with more than 81,000 units.
Texas was home to some of the largest declines in Q2, with Houston, Austin and Dallas-Fort Worth each with less than a third of the volume seen from Q1 2021 to Q1 2023. Raleigh-Durham was at a nearly 5% increase in Q2 starts compared to the larger timeframe.