What does it mean for rents?

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Since the September 2022 peak, units under construction is down 19.6 percent.

Peak Numbers

• Total: 1.711 million in September of 2022
• Multifamily: 1.013 million in August of 2023
• Single Family: 990,000 in February of 2006 (830,000 in June 2022 peak)

Illegal immigration explains the date differences.

Single family peaked first.

Decline from Recent Peak

• Total: -19.6 Percent from September of 2022
• Multifamily: -25.8 Percent from August of 2023
• Single Family: -24.9 Percent from June of 2022

Despite the multifamily decline, the number of units under construction is still a whopping 752,000.

In isolation, that would be the largest number since 985,000 in September of 1973.

Also note the recent plunge in housing starts and permits.

Housing Starts Plunge 9.8 Percent to the Lowest Level in 5 Years

• Housing starts are down 31.0 percent from the cycle high of 1.82 million in April of 2022.
• Housing permits are down 27.4 percent from the cycle high of 1.92 million in January of 2022
• Completions are down 13.0 percent from a much later peak of 1.755 million in August of 2024.

For more details, please see Housing Starts Plunge 9.8 Percent to the Lowest Level in 5 Years

The homebuilders have spoken. And they don’t like what they see.

What it Means for Rents

Despite the drop in units under construction, the level is still very elevated historically.

If these units under construction are no longer needed due to Trump shutting the border, the price of rent rates to decline in areas that are overbuilt.

Also, if new home prices start falling, the price of existing homes won’t be far behind.

Inflation or Disinflation?

In isolation, the still very high units under construction constitutes pent up disinflationary pressures.

However, things are not in isolation. Tariffs are a short-term inflationary pressure. So are budget deficits.

In practice, the Fed is stuck between competing forces and elected to do nothing.

As noted yesterday, the Fed Projects Higher Unemployment and Higher Inflation Citing Tariffs

The Fed’s outlook has soured vs its March forecast. “We expect a meaningful rise in inflation in the coming months,” said Powell.

Powel noted the possibility of “tensions” in economic policy. That’s the stagflation outcome of rising prices and falling employment. “For the time being, the Fed is well positioned to wait.”

June 16, 2025: QCEW Report Shows Overstatement of Jobs by the BLS is Increasing

The discrepancy between QCEW and the BLS jobs report is rising.

There’s a very good chance rising unemployment and falling demand arrests the Fed’s expected inflation. But that assumes I am correct on weakening jobs.

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