The Census Bureau’s new residential construction report for February showed high levels of multifamily permit issuance and rising unit starts but falling multifamily unit completions.
Multifamily housing permits high, but trending lower
The number of permits issued for buildings with 5 or more units in February was reported to be 597,000 units on a seasonally adjusted, annualized basis. This was down 5 percent (28,000 units) from January’s revised (-4,000 units) figure. February permits were up 12 percent from the level recorded in February 2021 and were 9 percent higher than the trailing 12-month average.
In addition, 55,000 permits were issued in February for units in buildings with 2 to 4 units. This was down 4 percent (2,000 units) from the revised level (-7,000 units) for January. February permits for units in buildings with 2 to 4 units were up 15 percent from the year-earlier level and were 5 percent higher than 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 weighted 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 February was down 2 percent from the level in January but was 18 percent higher than the level of February 2021. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 680,000 units.
On a month over month basis, the three-month weighted moving average for multifamily permit issuance was up 3 percent in the West. Multifamily permits fell by a fraction in the Midwest, by 3 percent in the South and by 10 percent in the Northeast.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 43 percent in the Midwest, 17 percent in the South, 14 percent in the Northeast and 11 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 show strength
The preliminary February figure for multifamily housing starts in buildings with 5 or more units was 501,000 units on a seasonally adjusted, annualized basis. This was reported to be up 1 percent (4,000 units) from the revised figure (-13,000 units) for January.
Compared to the relatively weak level of February 2021, multifamily housing starts in buildings with 5 or more units were up 37 percent. The reported starts figure was 8 percent above the trailing 12-month average and 28 percent higher than the monthly average from 2019.
Multifamily housing construction starts (two or more units per building) in February were up 4 percent from their January level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 17 percent in the South. However, starts fell 6 percent in the Midwest, 8 percent in the Northeast and 13 percent in the West from the levels of the prior month. Starts in the South represented 54 percent of the starts for the entire country.
The three-month weighted moving average of starts was up 22 percent for the country-as-a-whole on a year-over-year basis. Compared to February 2021, starts were up 47 percent in the Midwest and 26 percent in the South. Starts fell 25 percent in the West and 50 percent in the Northeast.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions fall again
The preliminary February multifamily housing unit completions figure in buildings with 5 or more units per building was 266,000 units on a seasonally adjusted, annualized basis. This was reported to be down 11 percent (34,000) units from January’s revised (-9,000 units) figure.
Compared to February 2021, multifamily housing completions in buildings with 5 or more units per building were down 17 percent. Compared to the trailing 12-month average, completions were down 27 percent and compared to the monthly average for 2019, completions were down 23 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 weighted moving averages. The three-month weighted moving averages of completions was up 12 percent in the Midwest but was down 23 percent in the Northeast and 15 percent in both the South and 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 14 percent nationally. Completions were up 30 percent in the Midwest, but completions fell 11 percent in the West, 18 percent in the South and 34 percent in the Northeast.
As the number of unit starts outpaces the number of unit completions, the number of units under construction continues to rise. In February, Census reported that there were 770,000 units under construction in buildings with 5 or more units per building. This is up 18 percent, or 115,000 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.
