Multifamily construction boosts April housing starts amid challenges

In April 2025, the US housing market recorded a slight uptick in new residential construction. Privately owned housing starts rose to a seasonally adjusted annual rate of 1.36 million units, up 1.6 percent from March. However, this increase masks diverging trends. Multifamily starts showed renewed momentum, while single-family housing activity continued to decline.

Multifamily construction drives the rebound in housing starts

Multifamily housing, especially buildings with five units or more, drove April’s gains. Starts in this segment reached an annual rate of 420,000 units. The trend reflects a sustained push toward denser developments in urban and suburban markets.

Affordability pressures and higher interest rates are redirecting demand away from ownership and toward rental housing. Developers continue to prioritize multifamily projects, which offer greater income stability and often shorter construction timelines. Investors are also responding to these dynamics, favoring multifamily over more capital-intensive single-family developments.

Single-family housing struggles under pressure from financing and costs

Single-family starts declined to an annual rate of 927,000, down 2.1 percent from March. This marks the third consecutive monthly decline for this category. The combination of elevated mortgage rates, tight credit conditions, and persistent material and labor costs continues to weigh heavily on this sector.

Builders are navigating cautious consumer sentiment and affordability limits. With fewer first-time buyers able to enter the market, developers are focusing on completing existing projects and delaying new groundbreakings. Until financing conditions improve, single-family construction is likely to remain subdued.

Permitting and completion rates point toward tightening supply

Building permits and housing completions signal a slower pipeline of future inventory. In April, the number of housing units authorized by permits fell to an annual rate of 1.45 million, a 4.7 percent drop from March and 3.2 percent below April 2024.

Completions dropped to 1.45 million, down 5.9 percent month-over-month and 12.3 percent year-over-year. These declines suggest continued bottlenecks in delivery timelines due to ongoing labor shortages, supply chain issues, and regulatory delays. For markets already constrained by limited inventory, declining completions may worsen price pressures in the coming months.

Broader economic signals continue to steer housing sector outcomes

The April housing report reflects the push and pull of larger economic trends. Interest rates remain high, and inflation is moderating slowly. These factors are keeping borrowing costs elevated, limiting access to financing for both builders and buyers.

At the same time, steady job growth and relative economic stability continue to support baseline housing demand, particularly in high-growth regions. The divergence between multifamily and single-family performance may continue as developers recalibrate their strategies based on local demand, cost structures, and risk profiles.

Sources:
Modern Distribution Management – April Housing Starts