Multifamily Starts are Down, But Things Are Looking Up

The housing market is cyclical, and we may be approaching a turning point.

After several years of low rates and record multifamily starts, the pace has clearly slowed— as expected. In May, housing starts fell 9.8%. Single-family starts held steady, while multifamily starts are down nearly 30% year-to-date. As of June, NAHB reports there were 752,000 apartments under construction—down 4.6% from May and 18.2% below year-ago levels, the result of higher rates and record deliveries. Multifamily permitting peaked in early 2023 in many markets and has been trending downward since. Economists suggest we may now be at or near the bottom of this cycle.

Knowing when you’ve reached the bottom is never easy. You only know it in hindsight. And if we are at the bottom, it’s hard to know how long we’ll be here.

And yet, there are reasons to be optimistic.

Costs appear to be leveling off. CoStar reports modest but steady rent growth in new Class A apartments over the past two years, and vacancy rates remain stable. Developers are already planning for 2026 and 2027 for what’s expected to be a lull in new deliveries. 

While traditional bank financing remains tight, FHA financing continues to be a good option. Rates are higher, but there is plenty of liquidity and financing is available. At AGM, our pipeline for 2026 and beyond is as strong as it’s ever been. We’re encouraged to see that HUD continues to streamline and simplify the process, making deals more accessible and efficient.

 We may be at the bottom of the cycle—but we’re looking up.

If you have questions or would like to discuss how to finance your next development project, please schedule a call.