Development activity picks up among for-sale housing market across the U.S. while demand increases in multifamily

Single-family:

• While the average home sale price in the U.S. rose by 33.7% from 2019 to 2024, the number of homes sold fell by 23.1% over the same period.
• From 2000 to 2008, an average of 1.65 million homes were built each year. Due to the subprime mortgage crisis, that average fell to just 757,000 homes per year from 2009 to 2015. From 2016 to 2024, the average recovered to 1.31 million homes—still significantly lower than before the Great Recession. As for-sale development activity has not kept demand (for a variety of reasons including the rise in construction costs, interest rates, and insurance rates, etc.), home prices have faced upward pressure.
• 21.3% of U.S. homeowners have a mortgage rate below 3% while 42% of U.S. homeowners are mortgage-free. The low-cost basis for this combined 63.3% of homeowners has greatly reduced the overall potential for-sale market inventory as it’s no longer cost-effective to sell and move into a more costly housing market. However, single-family home starts increased by 6.5% to 1.01 million between December 2023 and December 2024, representing a potential shift within the for-sale market.
   

Multifamily:

• U.S. multifamily effective rents increased by 16.7% between 2019 and 2024 but saw limited growth at 0.8% since 2023. The recent rent stabilization was fueled by an uptick in construction activity from 2019 to 2024, leading to a 19.7% growth in multifamily units.
• As people seek affordable, accessible alternatives amid rising home prices and limited inventory, multifamily demand rises. In 2024, absorption levels were 67.1% higher than annual averages between 2015 and 2019. However, elevated interest rates and tempered rent growth have slowed development in the short-term, which caused multifamily construction activity to drop by 31.8% year over year from the end of 2023.