Single family builds filling the supply gap, multi family permits at 3 yr low

Housing starts in November totaled 1.56mm, a large 200k more than expected and up from 1.359mm in October (revised down by 13k). Most of the upside came in the single family category as starts here rose by a 174k m/o/m to 1.143mm, the most since April 2022. Multi family starts were up by 27k m/o/m to 417k.

In contrast, the permit figure, the precursor to future builds, was about as forecasted at 1.46mm. Single family permits were up by 7k m/o/m while multi family starts fell by 45k to 484k and that is the lowest since October 2020.

Bottom line, it’s hard to explain the one month pop to this degree in single family starts but we know that more supply has been needed and builders have been discounting their product. Either way, the permit figure was calmer and that is what is the leading indicator here. Also, as stated, there is a shrinking number of new multi family projects getting started. That’s both because there is already a huge amount of units coming on line in 2024, about 1mm, and deal numbers don’t currently pencil out with slowing rent growth and the high cost of capital. In late 2025 and in 2026, rental growth is going to spike again I believe. We are long a few apartment REITS, acknowledging a rental pricing challenge in 2024 but a brighter one past that.