The Census Bureau’s new residential construction report for March showed high levels of multifamily permit issuance and rising unit starts. However, multifamily unit completions are not keeping pace resulting in an increase in the number of units under construction.
Multifamily housing permits rebound
The number of permits issued for buildings with 5 or more units in March was reported to be 672,000 units on a seasonally adjusted, annualized basis. This was up 11 percent (64,000 units) from February’s revised (+9,000 units) figure. March permits were up 34 percent from the level recorded in March 2021 and were 21 percent higher than the trailing 12-month average.
In addition, 54,000 permits were issued in March for units in buildings with 2 to 4 units. This was unchanged from the revised level (-1,000 units) for February. March permits for units in buildings with 2 to 4 units were down 7 percent from the year-ago level but were 2 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 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 March was up 2 percent from the level in February but was 21 percent higher than the level of March 2021. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 697,000 units.
On a month over month basis, the three-month weighted moving average for multifamily permit issuance was up 3 percent in the Midwest and the West and up 2 percent in the South. Multifamily permits fell by a fraction 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, 22 percent in the Northeast, 18 percent in the West and 16 percent in the South.
The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.
Multifamily housing construction starts higher on jump in Northeast
The preliminary March figure for multifamily housing starts in buildings with 5 or more units was 574,000 units on a seasonally adjusted, annualized basis. This was reported to be up 8 percent (40,000 units) from the revised figure (+33,000 units) for February and was the highest number of starts reported since January 2020.
Compared to the level of March 2021, multifamily housing starts in buildings with 5 or more units were up 28 percent. The reported starts figure was 20 percent above the trailing 12-month average and 47 percent higher than the monthly average from 2019.
Multifamily housing construction starts (two or more units per building) in March were up 5 percent from their February level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 129 percent in the Northeast and 6 percent in the West. However, starts fell 14 percent in the Midwest and 19 percent in the South from the levels of the prior month.
The three-month weighted moving average of starts was up 28 percent for the country-as-a-whole on a year-over-year basis. Compared to March 2021, starts were up 103 percent in the Northeast, 48 percent in the Midwest, 13 percent in the South and 2 percent in the West.
The following chart shows the three-month weighted moving average of starts by region for the last 25 months.
Multifamily housing completions continue weak
The preliminary March multifamily housing unit completions figure in buildings with 5 or more units per building was 292,000 units on a seasonally adjusted, annualized basis. This was reported to be up 1 percent (3,000) units from February’s revised (+23,000 units) figure.
Compared to March 2021, multifamily housing completions in buildings with 5 or more units per building were down 36 percent. Compared to the trailing 12-month average, completions were down 25 percent and compared to the monthly average for 2019, completions were down 19 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 1 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving averages of completions was up 10 percent in the South and 5 percent in the Midwest but was down 13 percent in the Northeast and 18 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 23 percent nationally. Completions were up 5 percent in the South, but completions fell fractionally in the Midwest, 46 percent in the Northeast and 48 percent in the West.
The three-month weighted moving average of completions by region for the past 25 months are shown in the chart below.
As the number of multifamily construction starts outpaces the number of unit completions, the number of units under construction continues to rise. In March, Census reported that there were 796,000 units under construction in buildings with 5 or more units per building on a seasonally adjusted annualized basis. This is up by 26,000 units for the month and was 21 percent, or 138,000 units, above the number of units under construction one year earlier.
All data quoted are based on seasonally adjusted results and are subject to revision.
