The Census Bureau’s new residential construction report for June showed multifamily permits and starts both recovering from last month’s declines. Unit completions fell during the month but were up compared to 2019.
Multifamily housing permit issuance rebounds
The number of permits issued for buildings with 5 or more units in June was reported to be 666,000 units on a seasonally adjusted, annualized basis. This was up 13 percent (77,000 units) from May’s revised (-3,000 units) figure, reversing last month’s decline. June permits were up 28 percent from the level recorded in June 2021 and were up 11 percent over the trailing 12-month average.
In addition, 52,000 permits were issued in June for units in buildings with 2 to 4 units. This was down 3,000 units from the (unchanged) level for May. June permits for units in buildings with 2 to 4 units were up 6 percent from the year-ago level but were 3 percent lower 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 June was up 2 percent from the level in May and was 21 percent higher than the level of June 2021. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 693,000 units.
On a month over month basis, the three-month weighted moving average for multifamily permit issuance was up 12 percent in the West, 3 percent in the South and 2 percent in the Northeast. Permit issuance fell 17 percent in the Midwest.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 26 percent in the South, 25 percent in the West, 14 percent in the Midwest and 5 percent in the Northeast.
The following chart shows the three-month weighted moving averages of multifamily housing construction permits by region for the last 25 months.
Multifamily housing construction starts also rise
The preliminary June figure for multifamily housing starts in buildings with 5 or more units was 568,000 units on a seasonally adjusted, annualized basis. This was reported to be up 15 percent (74,000 units) from the revised figure (+25,000 units) for May. The sharp drop in starts reported last month was partially blunted by April’s starts figure being revised downward (-22,000 units) while May’s figure was revised upward.
Compared to the level of June 2021, multifamily housing starts in buildings with 5 or more units were up 16 percent. The reported starts figure was 14 percent higher than the trailing 12-month average and 46 percent higher than the monthly average from 2019.
Multifamily housing construction starts (two or more units per building) in June were up 2 percent from their May level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 23 percent in the West and 2 percent in the Northeast. Starts fell 5 percent in the South and 6 percent in the Midwest from the levels of the prior month.
The three-month weighted moving average of starts was up 17 percent for the country-as-a-whole on a year-over-year basis. Compared to June 2021, starts were up 48 percent in the Northeast, 20 percent in the South and 4 percent in the West. Starts fell 31 percent in the Midwest.
The following chart shows the three-month weighted moving average of multifamily housing starts by region for the last 25 months.
Multifamily housing completions drop
The preliminary June multifamily housing unit completions figure in buildings with 5 or more units per building was 366,000 units on a seasonally adjusted, annualized basis. This was reported to be down 5 percent (21,000 units) from May’s revised (-30,000 units) figure.
Compared to June 2021, multifamily housing completions in buildings with 5 or more units per building were down 4 percent. Compared to the trailing 12-month average, completions were up 8 percent and compared to the monthly average for 2019, completions were up 6 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were up 4 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving averages of completions was up 23 percent in the Midwest, 3 percent in the South and 2 percent in the Northeast. Completions were down 3 percent in the West. The South region accounted for 52 percent of all completions.
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 5 percent nationally. Completions were up 10 percent in the Northeast and 1 percent in the West but fell 4 percent in the Midwest and 11 percent in the South.
The three-month weighted moving average of completions by region for the past 25 months are shown in the chart below.
The number of multifamily units under construction continued to rise in June. Census reported that there were 841,000 units under construction in buildings with 5 or more units per building on a seasonally adjusted annualized basis. This is up by 8,000 units from the revised (+5,000 units) level of the month before. It is 24 percent, or 163,000 units, higher than the number of units under construction one year earlier. There have not been this many multifamily housing units under construction since the mid-1970’s.
All data quoted are based on seasonally adjusted results and are subject to revision.
