Washington, DC, Feb. 2, 2023 – The National Association of Home Builders (NAHB) forecasts a decline in multi-family home starts in 2023 after unsustainably high production levels last year. Meanwhile, the redevelopment sector remains on solid ground and will perform better than the single-family and multi-family home markets in 2023.

2022 saw a multi-family building boom that rose about 15% from the previous year to over 500,000 annual pace – the first time since the Great Recession. However, the NAHB forecasts that the number of Multifamily dwellings will fall by 28% this year to 391,000 and will stabilize in 2024 at around 374,000.

“Slowing rent growth, rising unemployment, tighter financing conditions for commercial real estate and a significant volume of supply in the construction process have led to a large backlog of multi-family developments,” NAHB Assistant Vice President of Forecasting and Analysis Danushka Nanayakkara-Skillington said at a press conference. The conference took place during the NAHB International Builders Show in Las Vegas.

There are currently 943,000 apartments under construction, up 24.9% from 755,000 a year ago. This is the largest number of apartments under construction since 1974.

Looking at a different metric, eight of the top ten apartment buildings, as measured by the number of permits, showed annual growth from November 2021 to November 2022. The New York-Newark-Jersey City region, the largest in the country, registered a 9% increase in permits, while Atlanta-Sandy Springs-Roswell, Georgia posted the highest growth of 203%. All of the following markets also posted gains: Dallas-Fort Worth Arlington, Texas; Houston-Woodlands-Sugarland, Texas; Los Angeles-Long Beach-Anaheim, California; Washington-Arlington-Alexandria, DC-Virginia-Maryland-West Virginia; Phoenix-Mesa-Scotsdale, Arizona; and Minneapolis-St. Paul Bloomington, Minnesota-Wisconsin. Markets in Austin Round Rock, Texas and Seattle-Tacoma-Bellevue, Washington showed declines from the previous year.

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