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The National Association of Home Builders (NAHB) is projecting multifamily starts to decline this year. In 2023, multifamily starts totaled 472,000 units, down 14% compared with 2022. For 2024, NAHB projects starts will fall another 20% to 379,000 total units.

“Multifamily construction is forecasted to post a large decline in 2024 as the number of units currently under construction—approximately 1 million—is near the highest level since 1973,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, during a press conference at the International Builders’ Show in Las Vegas. “Tight lending conditions and the high cost of development loans continue to hinder additional multifamily housing production.”

According to Nanayakkara-Skillington, as new supply comes online, rent growth will slow and help to ease inflation. However, NAHB expects the market to stabilize in 2025, with a forecast for 388,000 units.

She added that another threat, in addition to today’s tight lending environment, facing the overall housing market, including multifamily, is the shortage of skilled labor. According to the NAHB, the industry is short more than 400,000 workers, and the challenge will only get worse as residential construction rebounds.

“Attracting skilled labor will remain a key objective for construction firms in the coming years,” she noted. “Efforts by the Home Builders Institute and state and local home builders associations to promote workforce development are critically important to help address the shortage of workers.”