The Census Bureau’s new residential construction report for June stated that the number of multifamily permits issued, starts and unit completions were all down sharply for the month. This was on top of downward revisions to May’s figures, including a major downward revision to starts. However, starts again outpaced completions so that the number of multifamily units under construction rose to another new high.
The report on single-family housing construction showed that, on a seasonally adjusted basis, single family permits rose 2.2 percent, extending a string of four monthly increases. However, starts fell, dropping 7.0 percent, while completions fell 2.8 percent. The reported number of single-family units under construction fell 6,000 to 688,000 units.
Multifamily housing permits plumet
The number of permits issued for buildings with 5 or more units in June was reported to be 467,000 units on a seasonally adjusted, annualized basis. This was down 13.5 percent (73,000 units) from May’s revised (-2,000 units) figure. June permits were down 33.1 percent from the level recorded in June 2022 and were also down 23.3 percent from the trailing 12-month average.
In addition, 51,000 permits were issued in June for units in buildings with 2 to 4 units. This was down 3,000 units from the revised (+2,000 units) figure for May. June permits for units in buildings with 2 to 4 units were down 10.3 percent from the year-ago level and were down 4.1 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 weighted moving averages. This averaging helps 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 down 6.0 percent from the level in May and was down 23.5 percent from the level of June 2022. The three-month weighted moving average for permits came it at 551,000 annualized units.
On a month-over-month basis, the three-month weighted moving average for multifamily permit issuance was up 2.7 percent in the Midwest but was down 4.6 percent in the West, 6.0 percent in the South and 18 percent in the Northeast.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was down 13 percent in the Midwest, 23 percent in the West, 25 percent in the South and 31 percent in the Northeast.
The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.
Multifamily housing construction starts fall
The preliminary June figure for multifamily housing starts in buildings with 5 or more units was 482,000 units on a seasonally adjusted, annualized basis. This was reported to be down 11.6 percent (63,000 units) from the revised figure for May. However, the preliminary figure for May reported last month was also revised sharply lower this month, falling 79,000 units to 545,000 units. This is the second report in a row where the previous month’s starts figure was revised lower by 55,000 units or more.
Compared to the level of June 2022, multifamily housing starts in buildings with 5 or more units were down 11.2 percent. The reported starts figure was 9.6 percent lower than the trailing 12-month average but was 24 percent higher than the monthly average from 2019 before the COVID pandemic.
Multifamily housing construction starts (two or more units per building) in June were down 3.0 percent from their May level for the country as-a-whole, based on three-month weighted moving averages. Starts were up 5.3 percent in the West and 0.7 percent in the South. Starts fell 10.8 percent in the Midwest and 25.5 percent in the Northeast from the levels of the prior month.
The three-month weighted moving average of starts was down 3.9 percent for the country-as-a-whole on a year-over-year basis. Compared to June 2022, starts were up 3.8 percent in the West, 2.5 percent in the Midwest and 1.5 percent in the South. Starts fell 41.2 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 completions also lower
The preliminary June multifamily housing unit completions figure in buildings with 5 or more units per building was 476,000 units on a seasonally adjusted, annualized basis. This was reported to be up down 2.5 percent (12,000 units) from May’s revised (-5,000 units) figure.
Compared to June 2022, multifamily housing completions in buildings with 5 or more units per building were up 26.3 percent. Compared to the trailing 12-month average, completions were up 16 percent and compared to the monthly average for 2019, completions were up 37 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were up 0.4 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was up 7.9 percent in the Northeast, 5.8 percent in the South and 1 percent in the Midwest. Completions were down 13.2 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 26 percent nationally. Completions were up 62 percent in the Northeast, 51 percent in the Midwest, 25 percent in the South and 3 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.
The number of multifamily units under construction was up again in June. The number of units under construction has been flat or higher every month since April 2020. Census reported that there were 977,000 units under construction in buildings with 5 or more units per building on a seasonally adjusted annualized basis. This was reported to be up by 7,000 units from the revised level of the month before. It is 15.8 percent, or 133,000 units, higher than the number of units under construction one year earlier.
All data quoted are based on seasonally adjusted results and are subject to revision.
