The Census Bureau released its monthly new residential construction report for February 2021. It reported that permits were strong, starts were moderate and completions were weak compared to the recent history of multifamily housing construction.
Multifamily housing construction permits off recent high
The number of permits issued for buildings with 5 or more units declined in February to a still high 495,000 units on a seasonally adjusted, annualized basis. This was down 12 percent from the very high level recorded for January. February permits were up 24 percent from the level recorded for February 2020 and were up 18 percent from the average level for the trailing 12 months.
In addition, 44,000 permits were issued in February for units in buildings with 2 to 4 units. This was down 21 percent from the revised level of the previous month and was down 2 percent from the number of such permits issued in February 2020.
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 weighted* moving average for permits issued for multifamily housing in February was up 1 percent from the January level and was 13 percent higher than the level of February 2020. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 555,000 units, exceeding even last month’s level.
On a month over month basis, the three-month weighted moving average for permit issuance was up 3 percent in the Northeast and 2 percent in both the South and the Midwest. It fell 3 percent in the West.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 16 percent in the West, 15 percent in the South, 14 percent in the Northeast and 3 percent in the Midwest.
The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.
Multifamily housing construction starts fall
The preliminary figure for multifamily housing starts in buildings with 5 or more units in January was 372,000 units on a seasonally adjusted, annualized basis. This is down 15 percent from the revised January level. The already strong level of January starts was adjusted sharply upward, rising 33,000 units to 435,000 units. February 2021 starts were down 28 percent from the high level of February 2020 but were in line with the average level of starts for the trailing 12 months.
Multifamily housing construction starts (two or more units per building) in February were down 1 percent from their January level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 12 percent in the South and 5 percent in the West. Starts fell 21 percent in the Northeast and 23 percent in the Midwest from the previous month.
The three-month weighted moving average of starts was down 30 percent for the country-as-a-whole on a year-over-year basis. Compared to the exceptionally high levels of February 2020, starts were down sharply in all regions of the country. Starts fell 36 percent in the Midwest, 33 percent in the South and 25 percent both the Northeast and the South.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions weak
Multifamily housing unit completions in buildings with 5 or more units per building rose 3 percent from January’s revised level, despite that figure being adjusted upward by 9,000 units. The preliminary reading on February completions came in at 314,000 units on a seasonally adjusted, annualized basis. Compared to February 2020, multifamily housing completions in buildings with 5 or more units per building were up 13 percent. February’s level of completions was 13 percent below the monthly average for 2020.
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 weighted moving averages. The three-month weighted moving averages of completions were down 15 percent in the West and 10 percent in the Northeast. Completions rose 3 percent in the Midwest and were essentially unchanged in the South.
On a year-over-year basis, the three-month weighted moving average of completions in buildings with 2 or more units per building was down 3 percent nationally. Completions were up 30 percent in the South, but completions fell 29 percent in the West and 17 percent in both the Midwest and the Northeast. Completions in the South represented 52 percent of completions nationally.
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.
*Starting this month, the calculation of the moving average was changed to put more weight on the current month and progressively less weight on the two prior months. In the past, all three months were weighted equally in calculating the moving average.