The Census Bureau released its monthly new residential construction report for November 2020. It shows a pickup in multifamily housing construction permits and starts but a sharp fall in the rate of completions of multifamily housing units.
Multifamily housing construction permits rebound
The number of permits issued for buildings with 5 or more units increased in November to 441,000 units on a seasonally adjusted, annualized basis. This was up 23 percent from the revised figure for October, which was adjusted downward by 6,000 units from the preliminary figure reported last month. However, November permits were down 17 percent from the exceptionally high level of November 2019. November permits were only 4 percent below the average monthly level in 2019, which was a very strong year for permits.
In addition, 55,000 permits were issued in October for units in buildings with 2 to 4 units, also an exceptionally high figure. This was down 4 percent from the revised level of the previous month, but was 34 percent higher than the number of such permits issued in November 2019.
Regional data for multifamily housing construction 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 November was up 5 percent from the October level, but was down 17 percent from the level of November 2019. This is shown in the first chart, below. The three-month moving average came it at 448,000 units, 6 percent below the trailing 12 month average and 10 percent below the monthly average in 2019.
On a month over month basis, the three-month moving average for permit issuance was up in all regions of the country. Permits rose 13 percent in the Midwest, 10 percent in the Northeast, 2 percent in the South and 1 percent in the West.
Compared to year-earlier levels, the three-month moving average of permits issued was up 1 percent in the Midwest but was down 12 percent in the Northeast, 18 percent in the South and 25 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 rise
The preliminary figure for multifamily housing construction starts in buildings with 5 or more units in November was 352,000 units on a seasonally adjusted, annualized basis. This is 8 percent higher than the revised October level. However, October starts were adjusted down by 8,000 units to 326,000 units. November starts were down 16 percent from their level in November 2019.
Multifamily housing construction starts (two or more units per building) in November were up 1 percent from their October level for the country as-a-whole, based on three-month moving averages. Starts were up 42 percent in the Northeast but were down 1 percent in the South, 4 percent in the West and 11 percent in the Midwest from their levels in October.
The three-month moving average of starts was down 15 percent for the country-as-a-whole on a year-over-year basis. Compared to November 2019, starts were up 20 percent in the Midwest but down 6 percent in the Northeast, 21 percent in the South and 27 percent in the West.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions plummet
The November report states that completions in buildings with 5 or more units per building fell 35 percent from October’s level, which itself was revised down by 16,000 units. The preliminary reading on November completions came in at only 280,000 units on a seasonally adjusted, annualized basis. Compared to November 2019, multifamily housing completions in buildings with 5 or more units per building were down 6 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 3 percent month-over-month, comparing three-month moving averages. By region, the three-month moving averages of completions were up 2 percent in the West and unchanged in the Northeast, but down 1 percent in the South and 17 percent in the Midwest.
On a year-over-year basis, the three-month moving average of completions in building with 2 or more units per building was up 32 percent nationally. Completions were up by 61 percent in the South, 51 percent in the Midwest and 13 percent in the West. Completions fell by 13 percent in Northeast.
Completions by region for the past 25 months are shown in the chart below.
All data quoted on a seasonally adjusted, annualized basis and are subject to revision.
