The Census Bureau released its monthly new residential construction report for July 2020. It shows a strong rebound in multifamily housing construction.
Permits up strongly
The number of permits issued for buildings with 5 or more units rose in July to 467,000 units on a seasonally adjusted, annualized basis. This was up 24 percent from the June figure, which was itself adjusted upward by 10,000 units. July permits were down only 0.4 percent from the number of permits issued in July 2019 but were up about 1 percent from the average of prior 12 months.
In addition, 45,000 permits were issued in July for buildings with 2 to 4 units. This was up 12.5 percent from the previous month and was 8 percent higher than the average level of 2019.
Regional data for multifamily housing is only reported for structures with two or more units. “Structures with 5 or more units” is not broken out as a separate category. Since the regional data is highly volatile and is frequently revised, it is examined here based on three-month moving averages. This averaging will tend to smooth out the effects of sudden shocks like the shutdowns in reaction to the COVID-19 pandemic.
Nationally, the three-month moving average for permits issued for multifamily housing in July was up 9 percent from the June level but was down 2 percent from the level of July 2019. This is shown in the first chart, below. The three-month moving average came it at 467,000 units, 8 percent below the trailing 12 month average.
On a month over month basis, permit issuance was up 33 percent in the Northeast, 23 percent in the Midwest, and 9 percent in the West. Permit issuance was down 2 percent in the South.
Compared to year-earlier levels, the three-month moving average of permits issued was up 23 percent in the Midwest and 3 percent in the Northeast. It was down 1 percent in the South and 17 percent in the West.
The following chart shows the three-month moving averages of permits by region for the last 25 months.
Multifamily housing construction starts surge
The preliminary report for July finds starts in buildings with 5 or more units per building rising 57 percent from the revised June figure to a level of 547,000 units on a seasonally adjusted, annualized basis. This figure is up 68 percent from the figure for July 2019.
Multifamily housing construction starts (two or more units per building) in July were up 33 percent from their June levels for the country as-a-whole, based on three-month moving averages. Starts were up strongly in all regions of the country, rising 55 percent in the Northeast, 35 percent in the South, 26 percent in the West and 25 percent in the Midwest.
The thee-month moving average of starts was up 5 percent for the country-as-a-whole on a year-over-year basis. Compared to July 2019, starts were up 15 percent in the Northeast, 9 percent in the Midwest and 5 percent in the South. On this measure, starts fell 0.3 percent in the West.
The following chart shows the starts by region for the last 25 months.
Completions also up
The July report shows that completions in buildings with 5 or more units per building rose 19 percent to a figure of 364,000 units on a seasonally adjusted, annualized basis. However, the comparison was strengthened by the June figure for completions being adjusted downward by 6,000 units. Compared to July 2019, completions in buildings with 5 or more units per building were up by 9 percent.
For the country as-a-whole, completions for multifamily housing (two or more units per building) were up 5 percent month-over-month, comparing three-month moving averages. By region, the three-month moving averages of completions were up 11 percent in the West, 9 percent in the Northeast and 4 percent on the South. In the Midwest, the three-month moving average of completions was down 6 percent.
On a year-over-year basis, the three-month moving average of completions in building with 2 or more units per building was up 5 percent nationally. Completions were up by 20 percent in the South but fell by 16 percent in Northeast, 9 percent in the Midwest and 0.7 percent in the West.
Completions by region for the past 25 months are shown in the chart below.
All data quoted are based on seasonally adjusted results and are subject to revision.