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Multifamily Pullback Drags U.S. Housing Starts Near Pandemic-Era Lows

Multifamily Pullback Drags U.S. Housing Starts Near Pandemic-Era Lows

Housing starts missed expectations as multifamily development tumbled, while single-family construction rebounded.

Nina Dale
September 18, 2026

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Good morning. High borrowing costs are taking a bigger bite out of the housing pipeline, particularly for multifamily projects. Apartment starts sank nearly 22% in August, potentially easing future supply pressure for existing properties.

🎙️ This Week on No Cap: Basis Industrial's president explains why small bay's diversified, deeply invested tenant base makes it the safest bet in commercial real estate right now. (Thanks to our sponsor, Warespace)

CRE Trivia 🧠

Who opened the first US warehouse club, converting a San Diego airplane hangar into what became the Costco template?

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Market Snapshot

S&P 500

GSPC

7,637.76

Pct Chg:
+1.14%

FTSE NAREIT

FNER

819.26

Pct Chg:
+0.35%

10Y Treasury

TNX

4.934%

Pct Chg:
-0.07%

CME Term SOFR

1-Month

3.89%

Pct Chg:
-0.00

*Data as of 09/17/2026 market close.

Building Blues

Multifamily Pullback Drags U.S. Housing Starts Near Pandemic-Era Lows

By the numbers: Housing starts fell 2.6% to an annualized 1.28 million units, below the 1.32 million forecast. Multifamily starts plunged nearly 22%, while single-family construction jumped 7.6% to 918,000 units, its strongest pace since March.

The pipeline is thinning: Building permits fell 2.7%, including a 1.8% decline for single-family homes. Completions dropped nearly 12% to their slowest pace since late 2018, signaling continued construction weakness.

Rates keep biting: Mortgage rates nearing 7% are squeezing affordability and builder confidence. Elevated inventories are also giving developers less reason to accelerate new construction.

Builders sweeten the deal: More builders are cutting prices and offering incentives to support sales. Lennar reported lower revenue and new orders, with discounting also weighing on margins.

Economic drag: Residential construction has reduced economic growth in five of the past six quarters. The Atlanta Fed estimates residential investment could shave 0.16 percentage point from third-quarter GDP growth.

Regional split: Starts fell 1.3% in the South but reached a five-month high in the West. The Midwest saw stronger single-family activity alongside a sharp multifamily slowdown.

➥ THE TAKEAWAY

Apartments hit the brakes: Fewer multifamily projects breaking ground could eventually ease the supply pressure facing existing apartment owners. But with high borrowing costs also constraining demand and development, the near-term picture remains a balancing act.

✍️ Editor’s Picks

Claude now sources CRE deals:Terrakotta's Claude Agent is disrupting the CRE industry as we speak. Brokers can now automate LLC skip-tracing, find motivated sellers, and source off-market deals. (sponsored)
Rent divergence: Commercial property rents remain higher year over year, but slowing office growth, accelerating retail declines and stabilizing industrial performance highlight widening market differences.
AI construction: AI could cut construction costs by 17%–20% and timelines by 22%–25%, with robotics and automation improving efficiency, safety and development profitability.
Human in the loop: AI can handle CRE’s data-heavy grunt work at scale while professionals retain the final judgment call. (sponsored)
REIT resilience: U.S. REITs returned 16.7% YTD through August 2026, outperforming broader equities as improving fundamentals, tight supply and attractive valuations strengthen the sector’s outlook.
CRE impact: U.S. CRE operations generated $609.9B in total economic output in 2025, supporting 3.9M jobs and contributing $344.4B to GDP across 79 BOMA markets.
City rankings: U.S. metros captured 16 of the global top 50, led by New York at No. 1, while housing affordability and governance challenges weigh on growth.

🏘️ MULTIFAMILY

Apartment permits: Multifamily permitting rose 7.9% YTD through July 2026 despite 5.8% fewer projects, signaling larger developments and shifting supply momentum away from the South.
Apartment rents: U.S. apartment rents dipped 0.03% in August to $1,751, ending an eight-month growth streak as the Pacific Northwest and Midwest posted 2.2% annual gains.
Bugatti residences: Bugatti is bringing a $650M, 60-story branded residential tower to Miami’s Brickell, with 183 units and more than 300 feet of Miami River frontage.
Housing fraud: DOJ charged three LA-area nonprofit workers over alleged misuse of $8.7M in housing aid, including funds spent on personal expenses, real estate and other unauthorized uses.

🏭 Industrial

Industrial CMBS: Industrial CMBS issuance reached $14.93B through August, with SASB deals driving volume as average loan sizes rose to $177.8M and LTVs reached 61.2%.
Amazon expansion: Amazon is reportedly planning to grow its same-day fulfillment network from 85 to 1,000+ locations by 2031, potentially driving billions in new industrial demand.
AI resilience: Data center demand remains strong despite calls for slower AI development, with supply constraints, cloud growth and AI inference offsetting potential weakness in frontier-model training.

🏬 RETAIL

Wellness anchors: Fitness and wellness concepts are becoming key retail anchors as location growth reaches 11.8% annually since 2024, boosting traffic, dwell times and demand for experiential centers.
Chipotle growth: Chipotle plans to add 350–370 restaurants in 2026, including its first South Korea location, as it expands toward a long-term goal of 7,000 stores.
Retail leases: NYC lawmakers are weighing mandatory retail lease extensions of up to one year, with rent increases capped at 7%–10%, as prime storefront availability tightens.

🏢 OFFICE

Thompson delay: Google pushed the Thompson Center opening to 2028, with the tech giant expected to occupy at least 600K SF of the 954K SF renovated Chicago Loop property.
Defense cluster: At least nine defense companies have opened or announced South Florida offices, with Palm Beach County emerging as a growing hub for defense tech, investment and talent.
Argonaut listing: George Soros’s Soros Fund Management is marketing the 140K SF Argonaut Building at 224 West 57th Street for roughly $100M, with a potential residential conversion.

🏨 HOSPITALITY

Kennedy closure: The Kennedy Center board voted to close the facility for two years, prompting a request for an emergency hearing over a potential violation of an existing court order.
Hotel financing: The Fed raised rates 25 bps to 3.75%–4%, increasing hotel borrowing costs while potentially bringing greater stability to long-term capital markets.

📈 CHART OF THE DAY

CMBS delinquencies held nearly flat at 7.85% in August, but rising office, retail, and hospitality distress, along with maturity defaults driving 81% of new delinquencies, show refinancing pressure remains firmly in place.

CRE Trivia (Answer)🧠

Sol Price. His Price Club debuted July 12, 1976, in a converted Morena Boulevard hangar, introducing the bulk-purchase membership model that Costco, Sam's Club, and BJ's Wholesale Club later replicated across big-box retail.

Multifamily Pullback Drags U.S. Housing Starts Near Pandemic-Era Lows

Housing starts missed expectations as multifamily development tumbled, while single-family construction rebounded.

CRE Trivia 🧠