Apartment and condominium construction starts slowed again in October but remain far ahead of last year as recession fears heighten.
The Commerce and Housing and Urban Development departments reported on Thursday that the annual rate of multifamily starts was 556,000 units in October. That is the preliminary number and could be revised as has been the case with previous months.
October was a slight drop from September’s annual rate, a number that was revised upward to 559,000 units from 530,000, but was 17.3% higher than last year. September had looked like a big decline from August, which had risen to the highest level since April at 610,000 units, but that number was revised down to 565,000.
Construction lending interest rates have risen. But lending has tightened for apartment developers as concerns about a recession mount. The Federal Reserve has signaled more rate hikes are coming even as inflation appears to be slowing.
Barry Sternlicht, CEO of Starwood Capital Group, the largest apartment owner in the country by number of units, told CNBC's "Squawk Box" that the Fed's aggressive moves this year to tame inflation will harm the economy. "What they want to do is clearly suicide," Sternlicht said.
The total dollar value of residential construction starts in October fell 3% from September to an annual rate of $366.4 billion, according to Dodge Construction Network, a data analytics company. Multifamily starts were down 4% in October from the prior month but still 26% above the value of starts in October last year, according to Dodge.
Long Island City Center II in Long Island City, New York, was the largest multifamily project to start construction in October at $564 million, according to Dodge. The Waldorf Astoria residences and hotel in Miami was the second largest to get underway at $450 million, and Modera McGavock, a mixed-use development that includes apartments in Nashville, Tennessee, was the third highest at $167 million, according to Dodge.