Starts for U.S. multifamily developments of more than five units dropped 43.7% in March compared with the same month in 2023, the Census Bureau and the Department of Housing and Urban Development reported.

The decrease is the latest sign of a slowdown in development among multifamily landlords after a flood of new units began in 2021 and 2022.

In March 2024, apartment starts came in at an annualized rate of 290,000 units, compared with 515,000 units during the same month a year earlier. Permitting for apartments, a leading indicator of development, dropped 17.5% year-over-year in March but eked out a gain of 0.8% from February.

Single-family home starts, meanwhile, were up 21.2% annually, but down 12.4% from a month earlier.

Though apartment starts are down, the number of completed units entering the market is rising, a legacy of higher construction rates in recent years, National Association of Homebuilders' Danushka Nanayakkara-Skillington wrote in a blog post last week.

“A higher pace of completions in 2024 for multifamily construction will place some downward pressure on rent growth,” Nanayakkara-Skillington wrote.

Shelter inflation, which includes apartment rents and mortgage costs, rose 5.7% in March from a year prior and has been a prime factor in keeping the overall inflation rate elevated. That rate of shelter inflation is higher than the average of about 3.3% from 2015 to 2019.