The Census Bureau released its monthly new residential construction report for January 2021. It shows a rise in permits and starts of multifamily housing units but a drop in unit completions.
Multifamily housing construction permits rise sharply
The number of permits issued for buildings with 5 or more units jumped in January to 557,000 units on a seasonally adjusted, annualized basis. This was up 28 percent from the revised figure for December. January permits were also up 8 percent from the high level recorded for January 2020.
In addition, 55,000 permits were issued in January for units in buildings with 2 to 4 units. This was up 20 percent from the revised level of the previous month and was up 28 percent from the number of such permits issued in January 2020.
The 612,000 combined permits for units in buildings with 2 or more units is well above the level recorded in any other month in recent years.
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 January was up 14 percent from the December level, but was down fractionally from the level of January 2020. However, late 2019 into early 2020 was an exceptionally strong time for permit issuance. Permit issuance history is shown in the first chart, below. The three-month moving average for permits came it at 530,000 units, the highest level seen in a year.
On a month over month basis, the three-month moving average for permit issuance was up in all regions of the country. It rose 23 percent in the West, 19 percent in the Northeast, 12 percent in the South and 1 percent in the Midwest.
When comparing to year-earlier levels, the picture is more mixed. The three-month moving average of permits issued was up 5 percent in the West and 4 percent in the South but was down 11 percent in the Midwest and 12 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 rise
The preliminary figure for multifamily housing starts in buildings with 5 or more units in January was 402,000 units on a seasonally adjusted, annualized basis. This is up 16 percent from the revised December level. December starts were adjusted sharply upward, rising 34,000 units to 342,000 units. January 2021 starts were down 38 percent from the exceptionally high level of January 2020.
Multifamily housing construction starts (two or more units per building) in January were up 6 percent from their December levels for the country as-a-whole, based on three-month moving averages. Starts were up 16 percent in the Northeast, 8 percent in the West, 3 percent in the South 1 percent in the Midwest from the previous month.
The three-month moving average of starts was down 29 percent for the country-as-a-whole on a year-over-year basis. Compared to January 2020, starts were down sharply in all regions of the country. Starts fell 34 percent in both the Northeast and the South, 24 percent in the West and 13 percent in the Midwest.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions down
Multifamily housing unit completions in buildings with 5 or more units per building fell 28 percent from December’s revised level, despite that figure being adjusted downward by 9,000 units. The preliminary reading on January completions came in at 296,000 units on a seasonally adjusted, annualized basis. Compared to January 2020, multifamily housing completions in buildings with 5 or more units per building were down 24 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 13 percent month-over-month, comparing three-month moving averages. The three-month moving averages of completions were down in all regions of the country, falling 33 percent in the Midwest, 13 percent in the West, 11 percent in the South and 1 percent in the Northeast.
On a year-over-year basis, the three-month moving average of completions in buildings with 2 or more units per building was down 5 percent nationally. Completions were up 17 percent in the South, but completions fell 8 percent in the West, 22 percent in the Midwest and 33 percent in the 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.
