According to a detailed analysis by NAHB of quarterly Census data, it has been observed that the count of multifamily, for-rent housing starts witnessed a significant decline during the third quarter of 2024. In this particular quarter, a total of 94,000 multifamily residences commenced construction. Out of this figure, 88,000 were specifically built for rent. This marks a nearly 14% decrease when compared to the third quarter of 2023.

Market Share Shifts and Historical Comparisons

The market share of rental units within multifamily construction starts took a dip and fell below 94% during the third quarter. This occurred as the built-for-sale, multifamily condo market witnessed a notable gain. It is interesting to note that the historical low market share of 47% for built-for-rent multifamily construction was set during the third quarter of 2005, a time when the condo building boom was in full swing. On the other hand, an average share of 80% was registered during the 1980 - 2002 period.

Multifamily Condo Unit Construction Starts

For the third quarter, there was a notable increase in multifamily condo unit construction starts. The count rose from 3,000 a year ago to 6,000. Although it still constitutes a relatively small market, this represents the highest quarterly count since mid-2022. This growth indicates a potential shift in the housing market dynamics.

Average and Median Square Footage of Multifamily Construction

An elevated rental share of multifamily construction is having an impact on the typical apartment size. According to the third quarter 2024 data, the average square footage of multifamily construction starts has seen a slight increase and now stands at 1,061 square feet. The median has also edged up to 1,013 square feet. These estimates are close to multidecade lows, suggesting that the current construction trends are resulting in smaller apartment sizes.