The Census Bureau’s new residential construction report stated that multifamily completions leapt to a multiyear high in August. However, multifamily starts fell despite higher multifamily permit issuance. The number of multifamily units under construction also fell again.
Multifamily housing permits up again after last month’s drop
The number of permits issued for buildings with 5 or more units in August was reported to be 451,000 units on a seasonally adjusted, annualized basis. Permit issuance was up 8.4 percent from July’s revised (+8,000 units) figure. August permits were down 16.8 percent from their year-earlier level and were also down 1.1 percent from their trailing 12-month average.
In addition, 57,000 permits were issued in August for units in buildings with 2 to 4 units. This was up 8,000 units from the revised (-1,000) figure for July. August permits for units in buildings with 2 to 4 units were down 10.9 percent from the year-ago level but were up 7.2 percent from their 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 August was up 3.5 percent from the level in July but was down 14.2 percent from the level of August 2023. The three-month weighted moving average for permits came in at 495,000 annualized units.
On a month-over-month basis, the three-month weighted moving average for multifamily permit issuance was up 10.2 percent in the Northeast, 6.8 percent in the Midwest and 5.2 percent in the South.. Permit issuance fell 6.2 percent in the West.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was down 30.3 percent in the West, 10.1 percent in the Northeast, 9.1 percent in the Midwest and 7.8 percent in the South.
The following chart shows the three-month weighted moving averages of permits by region for the last 37 months. It also shows the un-averaged total number of multifamily permits issued for the country as-a-whole.
Multifamily construction starts lower
The preliminary August figure for multifamily housing starts in buildings with 5 or more units was 333,000 units on a seasonally adjusted, annualized basis. This was reported to be down 6.7 percent (24,000 units) from the revised (-6,000 units) figure for July.
Compared to the year-earlier level, multifamily housing starts in buildings with 5 or more units were down 6.2 percent. The reported starts figure was 6.3 percent lower than the trailing 12-month average.
Multifamily housing construction starts (two or more units per building) in August were up 2.0 percent from their July level for the country as-a-whole, based on three-month weighted moving averages. Starts rose 22.5 percent in the Midwest and 9.9 percent in the South. Starts fell 6.4 percent in the West and 19.1 percent in the Northeast.
The three-month weighted moving average of starts was down 12.7 percent for the country-as-a-whole on a year-over-year basis. Compared to year-earlier levels, starts were up 0.3 percent in the Northeast but down 4.4 percent in the Midwest, 4.6 percent in the South and 37.4 percent in the West.
The following chart shows the three-month weighted moving average of starts by region for the last 37 months. It also shows the un-averaged total number of multifamily starts for the country as-a-whole.
Multifamily housing completions surge to multiyear high
The preliminary August figure for multifamily housing completions in buildings with 5 or more units per building was 740,000 units on a seasonally adjusted, annualized basis. Completions were reported to be up 198,000 units (36.5 percent) in August from the revised (+69,000) level of the month before. This is the third month in a row where the change in completions plus the revisions to the previous month was 177,000 or more units.
Compared to the year-earlier level, multifamily housing completions in buildings with 5 or more units per building were up 79.2 percent. Compared to the trailing 12-month average, completions were up 43.6 percent.
For the country as-a-whole, multifamily completions (two or more units per building) were up 15.9 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was up 47.3 percent in the South, but down 5.9 percent in the Northeast, 6.4 percent in the West and 14.8 percent in the Midwest. Based on the unaveraged data, completions in the South represented 66.1 percent of completions for the country as-a-whole.
On a year-over-year basis, the three-month weighted moving average of multifamily completions in buildings with 2 or more units per building was up 67.7 percent nationally. Completions were up 105.7 percent in the South, 80.3 percent in the Midwest and 30.2 percent in the West. Completions were unchanged in the Northeast.
The three-month weighted moving average of completions by region for the past 37 months are shown in the chart below. It also shows the un-averaged total number of multifamily completions for the country as-a-whole.
The number of multifamily units reported to be under construction continued its downward trend in August. Census reported that there were 850,000 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 28,000 units from the revised (+8,000 units) level of the month before. It is 15.3 percent, or 153,000 units, lower than the number of units under construction one year earlier.
Single-family permits up but completions down
The report on single-family housing construction showed that, on a seasonally adjusted basis, single family permits rose 2.8 percent month-over-month but fell 0.5 percent year-over-year to 967,000 units. Last month’s permits figure was revised higher by 3,000 units to 941,000 units on a seasonally adjusted annualized basis. Starts rose 15.8 percent month-over-month and 5.2 percent year-over-year to 992,000 units. Completions were down from last month’s revised (+36,000 units) level, falling 5.6 percent month-over-month but rising 8.4 percent year-over-year to 1,029,000 units. The reported number of single-family units under construction fell 2,000 units from the revised level of the month before to 642,000 units.
All data quoted are based on seasonally adjusted results and are subject to revision.
