Housing: Multi-Family Boom vs Single-Family Bust

Single-family housing activity is falling into a recession. Single-family housing starts fell 29.5% ytd through October. Housing downturns have been major contributors to most recessions in the past. This time, though, strength in multi-family starts is offsetting some of the weakness in single-family starts. Single-family starts has accounted for only 51% of residential construction put in place over the past 10 years, down from close to 70% prior to the Great Financial Crisis.

The pandemic caused single-family home prices to soar. However, the inflationary consequences of the pandemic forced the Fed to raise interest rates, sending mortgage rates soaring. As a result, many households can no longer afford to buy a home and must rent, which is driving up rents and the construction of rental apartment buildings.