Single-family and multifamily starts have fallen for a few years. There were 337,000 multifamily starts in 2024, down 36% from a 2022 peak. That should take pressure off inventory growth and help lower vacancy rates, allowing owners to regain some pricing power they had lost with an oversupply of new units.

Single-family starts were up 6% year-over-year, totaling over 1 million. However, that will add to the unsold inventory that is building up, given that the high costs of owning a house — prices as well as mortgage rates — are keeping more people in rentals. There are only two metros where buying a home is cheaper than renting, according to Realtor.com. The affordability gap between renting and buying is likely to further widen in 2025, as Redfin has predicted.

Costs of final delivery commercial construction, according to government data, are up more than 40% since pre-pandemic times. Potential buyers aren’t the only ones facing higher interest rates, adding even more financial burden to developers. Single-family rental owners may be able to increase their portfolios’ holdings if developers cannot otherwise sell them quickly and easily enough to maintain at least minimum levels of profit.

This still leaves the overall housing market in a state of strategic disarray. As Jodka wrote, Zillow’s estimate of the housing gap is 3.4 million units. Freddie Mac says the number is nearer 3.7 million. Whichever number is correct, that plays badly in the combination of fewer multifamily starts, more single-family starts, and increasing inability for many to purchase. This may favor multifamily and single-family rental/build-to-rent in the short run. And yet, it raises the question of whether the overall market will remain stable because it ultimately depends on the financial stability of renters.