This paper presents a regional time series model of multifamily housing activity. The theoretical model, based on a profit‐maximizing builder or investor is used as a basis for estimating housing start and completion equations for each of the four Census regions and the U.S. as a whole. The empirical estimates show that new housing construction is highly responsive to profitability consideration, with the elasticity being between 5 and 14. The empirical estimates also demonstrate that there is substantial variance between regions in terms of parameter estimate