The Census Bureau’s new residential construction report for May showed weakness in all areas of multifamily housing construction. Permits, starts, units under construction and completions were all down from April’s levels.
Multifamily housing permits continue long slide
The number of permits issued for buildings with 5 or more units in May was reported to be 382,000 units on a seasonally adjusted, annualized basis. This is half the number of permits issued in February 2023. Permit issuance in May was down 6.1 percent from April’s revised (-1,000 units) figure. May permits were down 31.4 percent from the level recorded in May 2023 and were also down 20.3 percent from the trailing 12-month average.
In addition, 55,000 permits were issued in May for units in buildings with 2 to 4 units. This was down 1,000 units from the figure for April. May permits for units in buildings with 2 to 4 units were down 3.5 percent from the year-ago level but were up 2.5 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 so that underlying trends are more visible.
Nationally, the three-month weighted moving average for permits issued for multifamily housing in May was down 6.5 percent from the level in April and was down 25.5 percent from the level of May 2023. The three-month weighted moving average for permits came in at 456,000 annualized units.
On a month-over-month basis, the three-month weighted moving average for multifamily permit issuance was up 4.3 percent in the West. Permit issuance fell 3.4 percent in the Midwest, 3.5 percent in the South and 25.5 percent in the Northeast.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was down 20.8 percent in the Northeast, 22.6 percent in the South, 26.2 percent in the Midwest and 33.2 percent in the West.
The following chart shows the three-month weighted moving averages of permits by region for the last 37 months.
Multifamily housing construction starts fall by half from last year
The preliminary May figure for multifamily housing starts in buildings with 5 or more units was 278,000 units on a seasonally adjusted, annualized basis. This was reported to be down 10.3 percent (32,000 units) from the revised (-12,000 units) figure for April.
Compared to the year-earlier level, multifamily housing starts in buildings with 5 or more units were down 51.7 percent. The reported starts figure was 29.9 percent lower than the trailing 12-month average.
Multifamily housing construction starts (two or more units per building) in May were down 5.4 percent from their April level for the country as-a-whole, based on three-month weighted moving averages. Starts rose 3.6 percent in the West but fell 5.4 percent in the South, 14.7 percent in the Midwest and 18.1 percent in the Northeast.
The three-month weighted moving average of starts was down 45.5 percent for the country-as-a-whole on a year-over-year basis. Compared to May 2023, starts were down 37.0 percent in the West, 39.7 percent in the South, 61.2 percent in the Midwest and 65.3 percent in the Northeast.
The following chart shows the three-month weighted moving average of starts by region for the last 37 months.
Multifamily housing completions down for the month
The preliminary May multifamily housing unit completions figure in buildings with 5 or more units per building was 479,000 units on a seasonally adjusted, annualized basis. Completions were reported to be down 37,000 units (7.2 percent) in May.
Compared to the year-earlier level, multifamily housing completions in buildings with 5 or more units per building were up 0.8 percent. Compared to the trailing 12-month average, completions were down 0.2 percent.
For the country as-a-whole, multifamily housing construction completions (two or more units per building) were down 7.3 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was up 5.6 percent in the West and 1.6 percent in the Midwest. However, completions were down 11.9 percent in the South and 29.8 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 7.4 percent nationally. Completions were up 19.2 percent in the Midwest, 16.3 percent in the West and 10.4 percent in the South. Completions fell 37.5 percent in the Northeast.
The three-month weighted moving average of completions by region for the past 37 months are shown in the chart below.
The number of multifamily units reported to be under construction fell again in May. Census reported that there were 898,000 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 14,000 units from the revised (-7,000 units) level of the month before. It is 8.6 percent, or 85,000 units, lower than the number of units under construction one year earlier.
Single-family also has a bad month
The report on single-family housing construction showed that, on a seasonally adjusted basis, single family permits fell 2.9 percent month-over-month but were up 3.4 percent year-over-year to 949,000 units. Last month’s permits figure was revised higher by 1,000 units to 977,000 units on a seasonally adjusted annualized basis. Starts fell 5.2 percent month-over-month and were down 1.7 percent year-over-year to 982,000 annualized units. Completions dropped from last month’s level, falling 8.5 percent month-over-month, but rose 2.0 percent year-over-year to 1,027,000 units. The reported number of single-family units under construction fell 4,000 from the level of the month before to 679,000 units.
All data quoted are based on seasonally adjusted results and are subject to revision.
