More apartment developers report fewer starts, NMHC survey says

The National Multifamily Housing Council's quarterly survey of apartment construction and development activity for the third quarter of 2026 describes an environment the council itself calls challenging, and names three forces doing the work: rising construction costs, economic uncertainty and low rent growth. The headline figures are split. Twenty-nine percent of respondents reported starting fewer projects than three months earlier, up from 20% in June, while 24% said their firms had started more. Those are shares of respondents describing their own pipelines, not counts of units under construction, so the release measures the direction builders see in front of them and says nothing about the volume of product the industry has stopped building. Connect CRE reported the results.

The reason list deserves more attention than the headline. Among respondents who reported fewer starts, 65% attributed the pullback to economic uncertainty or to projects that were not financially feasible, and 59% of that same group also cited low rent growth. Both numbers carry a population that is easy to lose: the 59% is drawn not from all respondents but from those already reporting fewer starts, and the 65% is a combined share, so the coverage does not say which of those two explanations carried more weight. What the pair establishes is that the arithmetic stopped working somewhere, without identifying which line of the pro forma broke.

"Low rent growth combined with an uptick in interest rates and rising costs for labor and materials is making multifamily development more difficult to pencil," said Chris Bruen, NMHC senior director of research and chief economist. In the same statement, Bruen described respondents as remaining largely optimistic about construction conditions over the next 6-12 months and noted that nearly a quarter reported actually starting more projects than three months ago. That is the survey's other half, and it is why the quarter cannot be read as a retreat.

The forward answers back that up. Half of respondents expect overall construction conditions to improve over the next 6-12 months, up from 46% in June. Financing is where the survey draws its sharpest line: respondents expect equity to pull back over the next three months, the one category the release casts as worsening, while both debt and equity are expected to improve over the next year. The release's only prior-period comparisons are the two June figures, 20% and 46%, which means the direction of the financing answers arrives with no earlier reading attached to it.

The current-quarter answers and the forward ones sit close together: 29% reporting fewer starts against 24% reporting more, and 50% expecting conditions to improve against 46% in June. The gap between the camps is narrow, and the release reports only those two shares, leaving 47% of respondents outside both groups with no account of what they did. Set the two movements side by side and the share backing off rose nine points while the share expecting easier conditions rose four; caution about the current pipeline is deepening a little faster than confidence in next year's is building.

The release attaches a horizon to each of its three forward answers — three months for equity financing, a year for both debt and equity, and 6-12 months for overall construction conditions — and they do not line up. Equity is the only category forecast to worsen, and it is the only one with a three-month clock on it. Read together, that suggests, as inference rather than survey output, that the projects breaking ground into the new year will be the ones whose equity was arranged before conditions tightened, and that any broader pickup in starts would trail the improvement respondents expect instead of leading it. A market that reopens across a year is a different underwriting proposition from one where equity loosens inside a quarter, and the difference lands on whoever is sizing a construction loan or pricing a preferred equity position.

For anyone holding multifamily through a fund, a private placement or a listed vehicle, the survey's transmission channel is supply. Fewer starts reported today is a thinner pipeline in the years those projects would have delivered into, and rent growth is the variable the release names twice, once in the council's description of the environment and again in the reasons developers gave for pulling back, while carrying no forecast at all. Debt and equity get a horizon. The revenue line gets none.

The next reading arrives with the fourth-quarter survey, and the answer to watch is the equity question. If the expected three-month pullback shows up there as fewer groundbreakings, the 29% will read as the beginning of something; if it shows up only as softer sentiment against that 50% improve-conditions share, the third quarter will look like a pause. What respondents have said so far is that today's projects are getting harder to underwrite and tomorrow's conditions easier to imagine, and the fourth quarter is the first place the two statements have to hold at once.