🚨August prints show single-family starts down to an 890k SAAR while multi-family permitting fell to a 403k SAAR, signaling continued caution amid tighter construction lending and higher carry costs [Source: U.S. Census/HUD]. Reuters frames the move as inventory digestion pushing SF starts toward 2½-year lows [Source: Reuters]. Critically for CRE, units under construction in 5+ fell again (688.4k, NSA), implying a softer new-supply overhang into late-2025/2026—especially in Sun Belt metros that were over-delivering
Single-family housing starts: 890,000 SAAR (Aug 2025)
Multifamily (5+) permits: 403,000 SAAR (Aug 2025)
Multifamily units under construction: 688.4k, NSA (end-Aug 2025)
Loan Performance. Lower 2026 MF supply supports effective rent stabilization, aiding DSCR on stabilized deals. But higher for-longer credit spreads keep carry elevated; caps/floors still relevant for floating-rate bridge through lease-up.
Demand Dynamics. With deliveries decelerating, rent-beta improves first in balanced Midwest/coastal infill; overbuilt Sun Belt submarkets should see concessions burn off gradually before true rent re-acceleration.
Asset Strategies. Reduce downtime via renewal capture, amenity-lite OPEX trims, and targeted TI/LC tied to credit tenants. Stagger capex tranches to match absorption milestones.
Capital Markets. Term sheets remain selective; senior construction leverage tight with recourse creep. For core-plus MF, spreads vs 10Y remain sticky; CMBS/CLO risk desks favor stabilized, low-capex assets.
Supply moderation tightens 2026 rent math.
Development starts reset, but carry risk stays elevated.
Underwrite concessions through mid-2026 in heavy-delivery nodes.
🛠 Operator’s Lens
Refi. For stabilized MF, pursue prepay-flexible perms; cap extensions through maturity on floaters.
Value-Add. Tie capex to signed backfills; hold 7–10% contingency.
Development. Stress pro-forma interest carry +10–15%; pace draws to absorption.
Lender POV. Banks/CMBS still price execution risk; prefer proven lease-up velocity and lower T-12 concessions.
Next Census permits/starts read for confirmation of MF permit troughs [Source: U.S. Census/HUD].
Bank construction surveys for lending appetite resets.
Watch Sun Belt lease-ups for concession burn-off timing and renewal capture.
Reuters — [Source: U.S. Census/HUD]. FRED
