Dive Brief:
- Starts for buildings with five or more units dropped 21.8% year over year to a seasonally adjusted rate of 363,000 in July, according to a monthly report from HUD and the U.S. Census Bureau. However, they increased by 11.7% from June 2024.
- Developers pulled permits for a seasonally adjusted rate of 408,000 apartments in buildings with five units or more, an 18.2% YOY drop and a 12.4% decrease compared to June 2024.
- Overall, housing starts came in at a seasonally adjusted annual rate of 1.2 million in July — a 16% decline YOY and a 6.8% decline versus June 2024. Single-family builders broke ground on 851,000 homes — a 14.8% YOY increase and 14.1% below June’s numbers.
Dive Insight:
As starts have fallen off dramatically in 2024, apartment developers continue to work through their existing projects, shrinking the remaining pipeline. At the end of July, 870,000 units were under construction, a 13.3% YOY decrease and a 1.5% month-over-month decline.
Multifamily developers completed an annualized 473,000 apartments in buildings with five or more units in June, a 49.2% YOY jump and a 24.4% decrease compared to June.
Although many private developers are still facing issues finding capital, the REITs seem to be eyeing more starts.
In the second quarter, Arlington, Virginia-based AvalonBay Communities completed three projects totaling 901 apartments. It started three other developments comprising 903 apartments and 6,000 square feet of commercial space.
“We now expect to break ground on nine new communities this year for a total projected capital cost of $1.05 billion with the vast majority of these starts in either expansion regions or the Northeast and almost exclusively in suburban submarkets,” said Matthew Birenbaum, AVB’s chief investment officer, on the REIT’s Q2 earnings call last month.
In Q2, Houston-based Camden Property Trust completed construction on the 189-unit single-family rental community Camden Woodmill Creek in The Woodlands, Texas. It also began two new projects in Charlotte, North Carolina — the 420-unit Camden South Charlotte and the 349-unit Camden Blakeney.
Camden doesn’t expect more development starts in 2024. However, the firm has other projects in the pipeline for 2025 and beyond.
“I also think we’ll be able to expand the pipeline by helping other developers out who can’t get financing — who have shovel-ready land deals that they’re willing to part with,” CEO Ric Campo said on the REIT’s Q2 earnings call this month. “If you look at our history in cycles like this, we’ve always been able to ramp up our development pipeline.”
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