The Census Bureau’s new residential construction report stated that, after falling to the lowest level since April 2020 last month, multifamily starts rebounded to the highest level in a year in December. However, both multifamily permits and completions were reported to be down from the revised levels of the month before.
Multifamily permits in long-term slide
The number of permits issued for buildings with 5 or more units in December was reported to be 437,000 units on a seasonally adjusted, annualized basis. Permit issuance was down 5.8 percent from November’s revised (-17,000 units) figure. Permits were down 5.4 percent from their year-earlier level but were up 0.9 percent from their trailing 12-month average.
In addition, 54,000 permits were issued in December for units in buildings with 2 to 4 units. This was up 1,000 units from the revised (+1,000 units) figure for November. December permits for units in buildings with 2 to 4 units were up 5.9 percent from the year-ago level and were up 0.8 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 December was up 1.6 percent from the level in November but was down 4.8 percent from the level of December 2023. The three-month weighted moving average for permits came in at 493,000 annualized units.
On a month-over-month basis, the three-month weighted moving average for multifamily permit issuance was up 8.4 percent in the Midwest, 6.5 percent in the Northeast and 1.4 percent in the South. Permit issuance was down 6 percent in the West.
When compared to year-earlier levels, the three-month weighted moving average of permits issued was up 19.1 percent in the Midwest and 12.0 percent in the Northeast. These are the regions where Yardi Matrix recently reported that absorption is outpacing new supply. Permit issuance fell 10.6 percent in the South and 16.9 percent in the West.
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 pop back up
The preliminary December figure for multifamily housing starts in buildings with 5 or more units was 418,000 units on a seasonally adjusted, annualized basis. Starts were reported to be up 58.9 percent (155,000 units) from the revised (-1,000 units) figure for November. In addition, the October starts figure was revised higher by 38,000 units to 386,000 units.
Compared to the year-earlier level, multifamily housing starts in buildings with 5 or more units were down 11.3 percent. The reported starts figure was 22.6 percent higher than the trailing 12-month average.
Multifamily housing construction starts (two or more units per building) in December were up 18.4 percent from their November level for the country as-a-whole, based on three-month weighted moving averages. Starts rose 43.4 percent in the South and 32.5 percent in the Northeast. Starts fell 3.4 percent in the Midwest and 11.9 percent in the West.
The three-month weighted moving average of starts was down 12.3 percent for the country-as-a-whole on a year-over-year basis. Compared to year-earlier levels, starts were up 28.6 percent in the Northeast but down 7.8 percent in the Midwest, 12.5 percent in the South and 35.2 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 lower
The preliminary December figure for multifamily housing unit completions in buildings with 5 or more units per building was 570,000 units on a seasonally adjusted, annualized basis. Completions were reported to be down 1.7 percent (10,000 units) from the revised (+36,000 units) level of the month before. In addition, the October completions figure was revised 20,000 units higher to 632,000 units.
Compared to the year-earlier level, multifamily housing completions in buildings with 5 or more units per building were up 9.4 percent. Compared to the trailing 12-month average, completions were down 2.4 percent.
For the country as-a-whole, multifamily completions (two or more units per building) were down 3.2 percent month-over-month, comparing three-month weighted moving averages. The three-month weighted moving average of completions was up 32.3 percent in the West but down 4.3 percent in the South, 16.8 percent in the Midwest and 19.1 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 21.6 percent nationally. Completions were up 73.3 percent in the West, 71.5 percent in the Northeast and 2.1 percent in the South. Completions fell 24.6 percent in the Midwest.
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 fell again this month, but more slowly than has recently been the case. Census reported that there were 773,000 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 11,000 units from the revised (+4,000 units) level of the month before. It is 21.5 percent, or 212,000 units, lower than the number of units under construction one year earlier.
Single-family completions outpace starts
The report on single-family housing construction showed that, on a seasonally adjusted basis, single family permits rose 1.6 percent month-over-month but fell 2.5 percent year-over-year to 992,000 units. Starts rose 3.3 percent month-over-month but fell 2.6 percent year-over-year from last month’s revised (+5,000 units) level to 1,050,000 units. Completions were down from last month’s revised (-14,000) level, falling 7.4 percent month-over-month and also 7.4 percent year-over-year to 948,000 units. The reported number of single-family units under construction was up 0.8 percent from the revised (-1,000 units) level of the month before at 641,000 units.
All data quoted are based on seasonally adjusted results and are subject to revision
