The Census Bureau’s new residential construction report for August stated that the number of multifamily permits issued and unit completions were up from the levels reported last month. However, the number of multifamily starts was reported to be much lower. The reported data is highly volatile with both the starts and completions figures being more than 100,000 units different than the equivalent figures from the month before.
The number of multifamily units reported to be under construction fell for the first time since January 2021.
The report on single-family housing construction showed that, on a seasonally adjusted basis, single family permits rose 6.9 percent, starts fell 4.3 percent, while completions fell 6.6 percent. The reported number of single-family units under construction fell 1,000 to 676,000 units.
Multifamily housing permits higher
The number of permits issued for buildings with 5 or more units in August was reported to be 535,000 units on a seasonally adjusted, annualized basis. This was up 14.8 percent (69,000 units) from July’s revised (+2,000 units) figure. August permits were down 17.7 percent from the level recorded in August 2022 and were also down 6.4 percent from the trailing 12-month average.
In addition, 59,000 permits were issued in August for units in buildings with 2 to 4 units. This was up 12,000 units from the revised (-1,000 units) figure for July. August permits for units in buildings with 2 to 4 units were up 15.7 percent from the year-ago level and were up 13.1 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 August was up 5.0 percent from the level in July but was down 23.3 percent from the level of August 2022. The three-month weighted moving average for permits came it at 554,000 annualized units.
On a month-over-month basis, the three-month weighted moving average for multifamily permit issuance was up in all regions of the country. Permit issuance rose 9.4 percent in the West, 8.2 percent in the Midwest, 2.3 percent in the South, and 1.4 percent in the Northeast.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was down 33 percent in the Northeast, 27 percent in the South, 18 percent in the West and 12 percent in the Midwest.
The following chart shows the three-month weighted moving averages of permits by region for the last 25 months.
Multifamily housing construction starts plunge
The preliminary August figure for multifamily construction starts in buildings with 5 or more units was 334,000 units on a seasonally adjusted, annualized basis. This was reported to be down 119,000 units from the revised (-7,000 units) figure for July.
Compared to the level of August 2022, multifamily housing starts in buildings with 5 or more units were down 41 percent. The reported starts figure was 37 percent lower than the trailing 12-month average and was 14 percent lower than the monthly average from 2019.
Multifamily housing construction starts (two or more units per building) in August were down 16.9 percent from their July level for the country as-a-whole, based on three-month weighted moving averages. Starts were down 20 percent in the South, 18 percent in the West, and 18 percent in the Midwest from the levels of the prior month. However, starts rose 6 percent in the Northeast.
The three-month weighted moving average of starts was down 25 percent for the country-as-a-whole on a year-over-year basis. Compared to August 2022, starts were down 60 percent in the Northeast, 19 percent in the South, 17 percent in the West and 8 percent in the Midwest.
The following chart shows the three-month weighted moving average of multifamily construction starts by region for the last 25 months.
Multifamily housing completions rebound
The preliminary August multifamily housing unit completions figure in buildings with 5 or more units per building was 433,000 units on a seasonally adjusted, annualized basis. This was reported to be up 46 percent (136,000 units) from July’s unchanged figure.
Compared to August 2022, multifamily housing completions in buildings with 5 or more units per building were up 32 percent. Compared to the trailing 12-month average, completions were up 4.8 percent and compared to the monthly average for 2019, completions were up 25 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were up 1 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was down 9 percent in the South, but was up 6 percent in the Midwest, 10 percent in the West and 19 percent in the Northeast.
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 12 percent nationally. Completions were up 36 percent in the South, 23 percent in the West and 18 percent in the Northeast. Completions fell 38 percent from the unusually high levels of August 2022 in the Midwest.
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 reported to be under construction fell in August. Census reported that there were 995,000 units under construction in buildings with 5 or more units per building on a seasonally adjusted annualized basis. This was reported to be down by 2,000 units from the revised (+11,000 units) level of the month before. It is 13.5 percent, or 118,000 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.
