A Tale of Two Markets: Single-Family Slowdown and Multi-Family Momentum 

The housing market in the United States is undergoing a significant transformation, especially in the wake of interest rate hikes that began in March 2022. This shift is most evident in the single-family and multi-family housing sectors.

Post-March 2022, the construction of single-family homes has noticeably slowed down. This slowdown is attributed to a combination of higher costs, supply chain issues, and construction delays. The rising interest rates have made mortgages more expensive, dissuading both builders and buyers.

In stark contrast, multi-family housing projects have shown remarkable resilience. In fact, the number of these projects increased, reaching a record high in July 2023. The resilience can be partly attributed to longer permitting and construction timelines, which have allowed more projects to be in the pipeline despite the economic headwinds.  

For instance, in Philadelphia, there is a continued push for new apartment projects despite high interest rates. Developers are adapting by proposing smaller buildings with fewer units. This trend is likely a strategic move to mitigate financial risks.

As a result, Philadelphia has seen a significant apartment development boom, particularly in Northern Liberties and University City. These areas continue to see construction activities, indicating a strong local demand or specific market conditions favorable for development.

This continued development, especially of affordable housing, could have been bolstered by several factors:

• Availability of affordable subsidies or access to cheap city land, which helps counteract market trends
• Increased political support for affordable housing
• More federal and state funds are being allocated for affordable housing development

It is worth noting that SMART Apartment Data’s research backs up the multifamily trend seen in Philadelphia.

We continue to see an increase in property construction and the number of units over the analyzed six-year period (2017-2022). Specifically, the property count grew from 1,049 to 1,193, while units increased from 183,642 to 210,481.

Overall, our data backs up the general sentiment held by experts: the multifamily space is continuing to experience a consistent upward trend in property builds and units. You can always find more detailed reports on other cities and states in your SMART Apartment Data account.

For more in-depth analysis, innovative solutions, and the latest updates on the multifamily space, please visit the news section of the SMART website.