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The seasonally adjusted annual rate (SAAR) for multifamily starts shot up 30.6% in June to 414K units

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Multifamily Starts Surge in June, Raising Questions About a Rebound

Despite volatility in the data, June’s spike in multifamily construction starts hints that the sector may be bottoming out.

Proceed with caution: The seasonally adjusted annual rate (SAAR) for multifamily starts jumped 30.6% in June to 414K units, rebounding from a sharp drop in May. While that signals fresh momentum, experts caution the data—based on a small sample—can swing wildly. Starts are up 25.8% YoY, but it’s too early to call it a trend.

Permits up slightly: Multifamily permitting rose 8.1% from May to June, hitting a SAAR of 478K units. However, the YoY growth was a modest 2.1%. Unadjusted data show a flat permitting trend over the past four months, suggesting the surge in starts may not yet have support from the usual leading indicator.

Regional mixed bag: Annualized multifamily starts more than doubled in the Northeast (up 145.8%) and climbed nearly 29% in the South. The Midwest saw a 37.9% drop, while the West posted only a slight decline. Permitting also rose in the Midwest and South, while the Northeast and West recorded monthly declines.

Construction cools off: Despite the jump in starts, the number of multifamily units under construction dropped 0.6% from May and 19.6% YoY to 720K units. Completions also fell sharply, down 21% from May and nearly 40% from last June, pointing to a sector still in cooldown mode.

➥ THE TAKEAWAY

Too soon to call: The surge in multifamily starts could signal the start of a supply cycle rebound, but without a corresponding rise in permits and completions, it’s more of a hopeful blip than a full-fledged turnaround. Investors and developers should watch closely for consistency in the data before making any bullish bets.