Multifamily housing construction activity slows

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The Census Bureau’s new residential construction report for September showed lower multifamily housing construction activity than in recent months.

Multifamily housing permits issuance declines

The number of permits issued for buildings with 5 or more units in September was reported to be 498,000 units on a seasonally adjusted, annualized basis. This was down 21 percent (132,000 units) from the revised figure (-2,000 units) for August. September permits were up 18 percent from the level of September 2020 and were up 2 percent compared to the trailing 12-month average.

In addition, 50,000 permits were issued in September for units in buildings with 2 to 4 units. This was up 22 percent (12,000 units) from the revised level for August. September permits for units in buildings with 2 to 4 units were up 9 percent from the year-ago level and down 2 percent compared to the trailing 12-month average.

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 month-to-month variations in the data.

Nationally, the three-month weighted moving average for permits issued for multifamily housing in September was down 4 percent from the level in August but was 33 percent higher than the level of September 2020. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 595,000 units.

On a month over month basis, the three-month weighted moving average for permit issuance was up 4 percent in the Midwest, but down 4 percent in the South and 6 percent in both the Northeast and the West.

When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 47 percent in the West, 42 percent in the Midwest, 34 percent in the South and 3 percent in the Northeast.

The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.

multifamily housing permits

Multifamily housing construction starts sag

The preliminary September figure for multifamily housing starts in buildings with 5 or more units was 467,000 units on a seasonally adjusted, annualized basis. This was reported to be down 5 percent (25,000 units) from the revised figure for August. However, August’s figure was revised downward by 38,000 units, so the rebound in starts reported last month was not as strong as the preliminary report indicated.

The preliminary starts figure reported for September was 12 percent above the trailing 12-month average and 20 percent above the monthly average for 2019.

Multifamily housing construction starts (two or more units per building) in September were down 1 percent from their August level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 16 percent in the Midwest but down 1 percent in the West, 3 percent in the South and 8 percent in the Northeast from the levels of the previous month.

The three-month weighted moving average of starts was up 30 percent for the country-as-a-whole on a year-over-year basis. Compared to September 2020, starts were up 56 percent in the West, 36 percent in the South and 35 percent in the Northeast. Starts were down 16 percent in the Midwest.

The following chart shows the starts by region for the last 25 months.

multifamily housing starts

Multifamily housing completions lower again

The preliminary September multifamily housing unit completions figure in buildings with 5 or more units per building was 280,000 units on a seasonally adjusted, annualized basis. This was reported to be down 18 percent (62,000 units) from August’s revised figure. However, August’s completions figure was revised downward by 14,000 units, so the fall in completions was sharper than the headline comparisons indicate.

Compared to September 2020, multifamily housing completions in buildings with 5 or more units per building were down 42 percent. Compared to the trailing 12-month average, completions were down 29 percent and compared to the monthly average for 2019, completions were down 19 percent, so this was a weak report no matter how one looks at it.

For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 14 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving averages of completions was up 8 percent in the Midwest, but fell 1 percent in the Northeast, 19 percent in the South and 25 percent the West.

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 21 percent nationally. Completions were up 20 in the Midwest but fell 2 percent in the South, 14 percent in the Northeast and 43 percent in the West.

Completions by region for the past 25 months are shown in the chart below.

multifamily housing completions

All data quoted are based on seasonally adjusted results and are subject to revision.