The Census Bureau released its new residential construction report for December 2020. It is the inverse of last month’s report with a drop this month in multifamily housing construction permits and starts but a sharp rise in the number of completions of multifamily housing units.
Multifamily housing construction permits off slightly
The number of permits issued for buildings with 5 or more units decreased in December to 437,000 units on a seasonally adjusted, annualized basis. This was down 2 percent from the revised figure for November, which was adjusted up by 5,000 units from the preliminary figure reported last month. December permits were down 8 percent from the level of December 2019. For the year, permits were down 24 percent from the high level recorded in 2019.
In addition, 46,000 permits were issued in December for units in buildings with 2 to 4 units. This was down 2 percent from the revised level of the previous month, and was down 8 percent from the number of such permits issued in December 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.
Nationally, the three-month moving average for permits issued for multifamily housing in December was up 3.5 percent from the November level, but was down 12 percent from the level of December 2019. This is shown in the first chart, below. The three-month moving average came it at 466,000 units, almost equal to the trailing 12 month average and 6 percent below the monthly average in 2019.
On a month over month basis, the three-month moving average for permit issuance was up 15 percent in the West and 8 percent in the Midwest. It was down 1 percent in the South and 5 percent in the Northeast.
Compared to year-earlier levels, the three-month moving average of permits issued was down in all regions of the country. It fell 2 percent in the Midwest, 12 percent in the South, 14 percent in the West and 20 percent in the Northeast.
The following chart shows the three-month moving averages of permits by region for the last 25 months.
Multifamily housing construction starts fall
The preliminary figure for multifamily housing construction starts in buildings with 5 or more units in December was 312,000 units on a seasonally adjusted, annualized basis. This is off 15 percent from the revised November level. However, November starts were adjusted upward by 15,000 units to 368,000 units. December starts were down 40 percent from their level in December 2019.
Multifamily housing construction starts (two or more units per building) in December were down 1 percent from their November levels for the country as-a-whole, based on three-month moving averages. Starts were up 19 percent in the West and 6 percent in the South but were down 18 percent in the Northeast and and 31 percent in the Midwest from their levels in November.
The three-month moving average of starts was down 24 percent for the country-as-a-whole on a year-over-year basis. Compared to December 2019, starts were down in all regions of the country. Starts fell 21 percent in the West, 22 percent in the South, 29 percent in the Northeast and 33 percent in the Midwest.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions rebound
The December report states that completions in buildings with 5 or more units per building jumped 32 percent from November’s revised pace. Also in this report, major revisions were made to the completion numbers for both October and November. October’s completion number was revised up by 16,000 units and November’s completion number was revised up by 39,000 units to a much more healthy level of 319,000 units on a seasonally adjusted, annualized basis. Compared to December 2019, multifamily housing completions in buildings with 5 or more units per building were up 5 percent. Perhaps unexpectedly, the total of completions for 2020 came in higher than the total of completions for 2019.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 5 percent month-over-month, comparing three-month moving averages. By region, the three-month moving averages of completions were up 4 percent in the West and 1 percent in the Northeast, but down 8 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 14 percent nationally. Completions were up by 46 percent in the South, 36 percent in the Midwest and 14 percent in the West. Completions fell by 41 percent in Northeast.
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.
