The Census Bureau released its monthly new residential construction report for April 2020. It shows reduced activity at all stages of multifamily housing construction.
Permits fall
The number of permits issued for buildings with 5 or more units fell in April to 373,000 units on a seasonally adjusted, annualized basis. This was down 12 percent from the figure for March. April permits were down 23 percent from the number of permits issued in April 2019, and were down by 19 percent from the average monthly level for 2019 as-a-whole.
The onset of the COVID-19 crisis is generally taken to be the middle of March and permits for March came in surprisingly strongly last month. In this report, the preliminary reading on March permits was actually adjusted upward by 3,000 units, a positive sign. However, the fall in April permit levels shows growing weakness.
An additional 32,000 permits were issued in March for buildings with 2 to 4 units. This was down by 14,000, or 30 percent, from the previous month.
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 effects of sudden shocks like the shutdowns in reaction to the COVID-19 pandemic.
Nationally, the three-month moving average for permits issued for multifamily housing in April was down 11 percent from the March level and was down 9 percent from the level of April 2019. This is shown in the first chart, below. The three-month moving average came it at 440,000 units, the lowest level since November 2018.
On a month over month basis, permit issuance was flat in the South but was down in all other regions of the country. Permits fell 30 percent in the hard-hit Northeast, 15 percent in the Midwest and 10 percent in the West.
Compared to year-earlier levels, the three-month moving average of permits was up by 5 percent in the West. The three-month moving averages of permits fell by 30 percent in the Northeast, 27 percent in the Midwest and 3 percent in the South compared to their levels in April 2019.
The following chart shows the three-month moving averages of permits by region for the last 25 months.
Multifamily housing construction starts down
The good news for housing starts in this report is that starts in buildings with 5 or more units per building in March were adjusted up by 45,000 units to 392,000 units. However, the preliminary figure for starts in April came in at only 234,000 units. This is down 40 percent from the revised March figure and down 39 percent from the figure for April 2019.
Multifamily housing construction starts (two or more units per building) in April were down 25 percent from their March levels for the country as-a-whole, based on three-month moving averages. Starts were flat in the Midwest but fell by 53 percent in the Northeast, 32 percent in the West and 17 percent in the South.
Benefiting from comparison to a relatively weak spring, 2019, the three-month moving average of starts were up 4 percent for the country as-a-whole on a year-over-year basis. Compared to April 2019, starts were up 20 percent in the South and 5 percent in the Midwest while falling 13 percent in the West and 20 percent in the Northeast. In April 2020, the South had 57 percent of the starts for the country as-a-whole, based on three-month moving averages.
The following chart shows the starts by region for the last 25 months.
Multifamily housing completions fall
The current report shows that completions in buildings with 5 or more units per building fell 16 percent in April to a figure of 304,000 units on a seasonally adjusted, annualized basis. However, the March figure for completions was adjusted upward by 5,000 units to 362,000 units. Compared to April 2019, completions in buildings with 5 or more units per building were down by 24 percent.
For the country as-a-whole, completions for multifamily housing (two or more units per building) were down 8 percent month-over-month, comparing three-month moving averages. By region, the three-month moving averages of completions were down 15 percent in the West, 8 percent in the Northeast, 7 percent in the Midwest and 4 percent in the South.
On a year-over-year basis, the three-month moving average of completions in building with 2 or more units per building was down 25 percent nationally. However, the levels of completions in the spring of 2019 were exceptionally strong. Completions fell by 53 percent in the Northeast, 23 percent in the South, 19 percent in the West and 13 percent in the Midwest.
Completions by region for the past 25 months are shown in the chart below.
All data quoted are based on seasonally adjusted results and are subject to revision.
