Multifamily property construction is being slowed by a credit bottleneck, according to Bloomberg. While many builders turn to the Federal Housing Administration for long-term financing, the FHA has been inundated with enough applications to make processing difficult.

The FHA has already endorsed 1,100 multifamily loans this year, and expects to hit a record of $12 billion in loan endorsement before the year ends. Compared to 2008, when the agency endorsed $2 billion in multifamily loans, the increase is significant.

Bloomberg notes the FHA has been hard-pressed to meet builders' needs, as more and more turn to the government for financing. While loans are being processed, they cannot always do so in a timely fashion due to the number of applications.

The difficulty is exacerbated because, while the number of applications has grown, the staff expected to handle them has shrunk 13 percent since 2005. One executive of the National Multi Housing Council told the news source loans have been delayed as much as 18 months in some cases, when the processing time should have been 90 days.

This unfortunate state of affairs is likely to continue for some time, although private investment in the multifamily sector remains a strength of the real estate market. In the meantime, increased interest in renting continues to benefit rental property management firms and owners of existing apartment units.