July 19 Reuters A surge in U.S. rental home construction could soften rent prices in the months ahead, a muchawaited milestone in the Federal Reserve39;s effort to tame inflation even as tightening credit conditions are beginning to take the wind out of the apartment building boom.

Groundbreaking on multifamily homes that have more than five units a size that typically indicates apartment construction decreased by 11.6 to 482,000 in June from a revised 545,000 starts in May, the Commerce Department said on Wednesday. Aggressive interest rate hikes by the U.S. central bank have made it more expensive to finance largescale construction projects, and permits issued for new multifamily projects dropped last month to the lowest level since late 2020.

Despite the slowdown, the government data showed that more buildings are already on the way Another 977,000 were already under construction last month, a fresh record high. Meanwhile, there were also 476,000 apartment buildings that completed construction throughout June, down from a threedecade peak in February 2023, but still historically high.

The apartment building boom led regionally by the U.S. South and West is starting to alleviate a rental housing shortage that has sent rent costs spiraling in the last two years and may at last place downward pressure on rent prices.

Indeed, the gap between the number of multifamily units under construction versus singlefamily homes being built is the widest in nearly 50 years….