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Earlier this week,<\/span><\/span><\/span><\/span><\/span><\/span> <\/span><\/span><\/strong><\/span><\/span><\/span>HUD and the U.S. Census Bureau again reported strong numbers for multifamily construction.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Starts for buildings with five or more units jumped <\/span><\/span><\/span><\/span><\/span><\/span>11.6% month over month<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in July and rose 27.4% year over year to a seasonally adjusted rate of 470,000. Multifamily developers finished an annualized 383,000 apartments in buildings with five or more units, a 28.8% YOY drop and a 2.8% month-over-month decline.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Overall housing starts came in at a seasonally adjusted annual rate of 1.4 million in July \u2014 a 12.9% increase YOY and a 5.2% increase compared to the revised June estimate. Single-family home starts clocked in at a rate of 939,000 homes, a 7.8% YOY increase and a 2.8% month-over-month increase.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n On the surface, the multifamily performance, which had the second-highest number of starts for any July in the past four decades, is much stronger than was expected at the beginning of the year.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cThis follows the Census reporting that June 2025 multifamily starts were the fifth-highest for any June since 1990,\u201d rental housing economist Jay Parsons<\/span><\/span><\/span><\/span><\/span><\/span>\u00a0wrote on LinkedIn.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n But Parsons and other observers are skeptical. \u201cThe numbers don’t make a lot of sense,\u201d Jay Lybik, senior director of market research at Milwaukee-based apartment owner and manager Continental Properties, told Multifamily Dive.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Chris Nebenzahl, vice president of rental research at Irvine, California-based John Burns Research & Consulting, said his team has been monitoring the Census numbers over the past five months and has noticed an issue.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cThe Census data doesn\u2019t represent what we are seeing from our clients, third-party data providers that we subscribe to, or what our surveys are saying,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Nebenzahl said most of these sources indicate that multifamily starts are down 8% to 10% year over year. \u201cGiven the capital markets and uncertainty in the economy, I don\u2019t believe there\u2019s been an increase YOY in multifamily starts,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Ryan Davis, CEO of Dallas-based consulting firm Witten Advisors, told Multifamily Dive the 42,000 total multifamily starts in July were \u201claughable.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cEquity for new development went on a pause after [President Donald Trump’s tariffs were first enacted on] April 2, 2025, and given that the industry is influenced by these numbers, I suspect that pause will now continue into next year,\u201d Davis said. \u201cAdd to that tariff-driven\/uncertainty pause is the fact that very few deals can pencil.\u201d\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Parsons said that the current new construction numbers surpassed starts in the \u201cera of record demand and cheap debt\u201d in 2021 and 2022, and didn\u2019t align with the macroeconomic environment, including the ongoing high interest rates.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIn fairness, I know the Census is resource-constrained, so I’m not poking at the team there at all,\u201d Parsons said. \u201cBut something has got to change because our policymakers who rely on Census data are being fed critical misinformation.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n But not everyone agrees that there are issues with the Census numbers.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n While National Association of Home Builders Chief Economist Robert Dietz said he was surprised by the housing starts numbers this year, they are consistent with what the association\u2019s members told him in January.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWe also heard claims in 2021 and 2022 that the Census data was not consistent with what some were seeing [because they were expecting a big drop before what we saw in 2024],\u201d Dietz said. \u201cThis was due to the fact that there were outsized gains in smaller markets not measured in detail by other data providers.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Dietz thinks the same trend is occurring this time. He points to trailing data over the last four quarters that shows permits down in large core counties, flat in small metros and up in exurbs. Overall, apartment developers pulled permits for a seasonally adjusted rate of 430,000 apartments in buildings with five units or more in July, a 1.8% YOY decrease and a 9.9% decline compared to June.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cI wonder if when growth for multifamily is in lower-density, smaller areas, the Census numbers tend to run counter to other numbers,\u201d Dietz said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Many private sources are now tracking construction data, but Dietz still relies on the government\u2019s numbers.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cCensus Bureau data is the gold standard,\u201d Dietz said. \u201cI would need to see a lot of evidence to be convinced otherwise.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Click<\/span><\/em><\/span><\/span><\/span><\/span> here<\/span><\/span><\/span><\/em><\/span><\/span><\/span><\/span><\/a> to sign up to receive multifamily and apartment news like this article in your inbox every weekday.<\/span><\/em><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\nNot matching the environment<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n
The gold standard<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n