Multifamily construction starts continue to outpace completions

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multifamily housing construction

The Census Bureau’s new residential construction report for November stated that the number of multifamily construction permits issued was down from its recent very high levels but that starts and completions both rose for the month. Starts exceeded completions again leading the number of multifamily units under construction to rise to a new high.

In single-family housing construction, the changes from October’s report continued the recent trend of declining activity. Single family permits fell 11 percent and starts fell 4 percent, but completions rose 16 percent month-over-month. The number of single-family units under construction declined for the sixth straight month.

Multifamily housing permits fall sharply

The number of permits issued for buildings with 5 or more units in November was reported to be 509,000 units on a seasonally adjusted, annualized basis. This was down 18 percent (111,000 units) from October’s revised (-13,000 units) figure. November permits were down 11 percent from the level recorded in November 2021 and were down 20 percent from the trailing 12-month average.

In addition, 52,000 permits were issued in November for units in buildings with 2 to 4 units. This was up 1,000 units from the revised (-3,000) level for October. November permits for units in buildings with 2 to 4 units were up 8 percent from the year-ago level but were down 3 percent from 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 multifamily housing permits issued was down 8 percent in November from the level in October but was 2 percent higher than the level of November 2021. Permit issuance history is shown in the first chart, below. The three-month weighted moving average for permits came it at 620,000 units.

On a month over month basis, the three-month weighted moving average for the number of multifamily permits issued was unchanged in the Midwest but was down 6 percent in the South, 6 percent in the Northeast and 17 percent in the West.

When compared to year-earlier levels, the three-month weighted moving average of multifamily permits issued was up 20 percent in the South and 19 percent in the Midwest. Issuance fell 20 percent in the West and 22 percent in the Northeast.

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

multifamily housing unit permits by region

Multifamily housing construction starts rise

The preliminary November figure for multifamily housing starts in buildings with 5 or more units was 584,000 units on a seasonally adjusted, annualized basis. This was reported to be up 5 percent (27,000 units) from the revised figure (+1,000 units) for October.

Compared to the level of November 2021, multifamily housing starts in buildings with 5 or more units were up 25 percent. The reported starts figure was 11 percent higher than the trailing 12-month average and 33 percent higher than the monthly average from 2019.

Multifamily housing construction starts (two or more units per building) in November were up 2 percent from their October level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 22 percent in the Midwest and 9 percent in the South. Starts fell less than 1 percent in the West and 43 percent in the Northeast from the levels of the prior month.

The three-month weighted moving average of starts was up 21 percent for the country-as-a-whole on a year-over-year basis. Compared to November 2021, starts were up 37 percent in the South, 34 percent in the Midwest and 9 percent in the West. Starts fell 25 percent in the Northeast.

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

multifamily housing unit starts by region

Multifamily housing completions higher

The preliminary November multifamily housing unit completions figure in buildings with 5 or more units per building was 430,000 units on a seasonally adjusted, annualized basis. This was reported to be up 16 percent (59,000 units) from October’s revised (+9,000 units) figure.

Compared to November 2021, multifamily housing completions in buildings with 5 or more units per building were down 3 percent. Compared to the trailing 12-month average, completions were up 22 percent and compared to the monthly average for 2019, completions were up 24 percent.

For the country as-a-whole, multifamily housing construction completions (two or more units per building) were up 10 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was up a stunning 93 percent in the Northeast. Completions rose 8 percent in the Midwest and 2 percent in the South. However, completions were down 16 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 up 9 percent nationally. Completions were up 83 percent in the Northeast and 49 percent in the West. Completions fell 6 percent in the Midwest and 29 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.

multifamily housing unit completions by region

The number of multifamily units under construction was up again in November. The number of units under construction has not fallen in any monthly report since December 2020. Census reported that there were 915,000 units under construction in November in buildings with 5 or more units per building on a seasonally adjusted annualized basis. This is up by 10,000 units from the revised (-5,000 units) level of the month before. It is 26 percent, or 190,000 units, higher than the number of units under construction one year earlier.

The high for the number of multifamily units under construction reached during the boom of the 1970’s was 901,000 units in 1973.

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