Housing starts fell in April to 458,000, 12.8 percent below March’s estimated 525,000 starts and 54.2 percent off the April 2008 pace. This time, it was multifamily that pulled down the residential building sector.

While the single-family market showed some signs of recovery, moving up 2.8 percent over March to 368,000 starts, multifamily starts fell 46.1 percent to a rate of 90,000. “Multifamily activity has been steadily drifting lower for the past several months, and the April data simply put an exclamation point on this trend,” says Richard F. Moody, chief economist and director of research for Forward Capital in Austin, Texas.

Part of the problem is that multifamily construction is still plagued by the credit freeze, while demand has worsened in most markets around the country. “It’s hard to get lending,” says Byron Plant, executive vice president of multifamily operations for Asset Plus Cos., a multifamily manager and builder based in Houston. “But it’s not only that. We just don’t need a lot of new product right now.”

Still, Moody thinks that once the credit markets come back, building will start up again. Unfortunately, he doesn’t see that happening anytime soon. In fact, there will probably be many more months of pain before we see an uptick in multifamily construction activity.

“As far as any comeback, I think the key is the credit market conditions, more so than the economy,” he says. “After all, developers will want to build in anticipation of any rebound in demand, but until they face more favorable credit market conditions, they will be very limited in their ability to build. Given that defaults on commercial real estate loans are rising and lending standards on commercial real estate loans remain so elevated, I don't see any quick comeback here.”