The Census Bureau’s new residential construction report for January showed high levels of multifamily permit issuance and unit starts, but completions continue to lag.
Multifamily housing permits remain at high level
The number of permits issued for buildings with 5 or more units in January was reported to be 629,000 units on a seasonally adjusted, annualized basis. This was down 9 percent (61,000 units) from December’s revised (+15,000 units) figure. January permits were up 12 percent from the level recorded in January 2021 and were up 15 percent compared to the trailing 12-month average.
In addition, 65,000 permits were issued in January for units in buildings with 2 to 4 units. This was down 3 percent (2,000 units) from the revised level (-3,000 units) for December. January permits for units in buildings with 2 to 4 units were up 18 percent from the year-ago level and up 24 percent compared to the trailing 12-month average.
Last month’s Census report included a note stating that tax law changes in Philadelphia which apply to projects permitted after December 31, 2021 likely caused an increase in permit applications in December. In fact, permits for multifamily units (2 or more units per building) in the Northeast region jumped from 81,000 units in November 2021 to 217,000 units in December. In January, the number of permits for multifamily units in the Northeast region fell back to 84,000 units. Given the 133,000 unit drop in permit issuance in the Northeast, it is remarkable that permit issuance for the country-as-a-whole was down only 63,000 units.
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 January was up 3 percent from the level in December and was 27 percent higher than the level of January 2021. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 701,000 units.
On a month over month basis, the three-month weighted moving average for multifamily permit issuance was up 17 percent in the South and 4 percent in the Midwest. Multifamily permits fell by 2 percent in the West and 13 percent in the Northeast.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 40 percent in the Midwest, 35 percent in the Northeast, 34 percent in the South and 10 percent in the West.
The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.
Multifamily housing construction starts also strong
The preliminary January figure for multifamily housing starts in buildings with 5 or more units was 510,000 units on a seasonally adjusted, annualized basis. This was reported to be down 2 percent (11,000 units) from the revised figure (-3,000 units) for December.
Compared to January 2021, multifamily housing starts in buildings with 5 or more units was up 9 percent. The reported starts figure was 11 percent above the trailing 12-month average and 31 percent higher than the monthly average from 2019.
Multifamily housing construction starts (two or more units per building) in January were up 3 percent from their December level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 17 percent in the Northeast, 8 percent in the South and 4 percent in the West from the levels of the prior month. However, starts were down 19 percent in the Midwest.
The three-month weighted moving average of starts was up 27 percent for the country as-a-whole on a year-over-year basis. Compared to January 2021, starts were up 138 percent in the Midwest, 38 percent in the South and 4 percent in the West. Starts fell 14 percent in the Northeast.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions lag
The preliminary January multifamily housing unit completions figure in buildings with 5 or more units per building was 309,000 units on a seasonally adjusted, annualized basis. This was reported to be unchanged from December’s revised (+10,000 units) figure.
Compared to January 2021, multifamily housing completions in buildings with 5 or more units per building were down 1 percent. Compared to the trailing 12-month average, completions were down 15 percent while, compared to the monthly average for 2019, completions were down 11 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 6 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving averages of completions was down 38 percent in the Midwest and 24 percent in the Northeast. Completions were up less than 1 percent in the South and 24 percent in 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 4 percent nationally. Completions were up 16 percent in the Midwest, but completions fell 13 percent in the West, 7 percent in the Northeast and 2 percent in the South.
As the number of unit starts outpaces the number of unit completions, the number of units under construction continues to rise. In January, Census reported that there were 745,000 units under construction in buildings with 5 or more units per building. This is up 14 percent, or 91,000 units, from the number of units under construction one year earlier.
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.
