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Feds: Multifamily Production Plunges

Wednesday, December 21, 2016

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Residential construction starts in the U.S. were down 18.7 percent in November after hitting a nine-year high in October, with multifamily starts taking an especially big hit, according to Census Bureau numbers released Friday (Dec. 16).

Permits for single-family and smaller multifamily residences, however, rose, signaling some positive news for the industry.

high rise construction
© iStock.com / BirdImages

Multifamily housing construction starts slipped nearly 44 percent, from 462,000 to 259,000, seasonally adjusted, from October to November.

According to the new residential construction numbers, issued jointly by the U.S. Census Bureau and Department of Housing and Urban Development, multifamily housing construction starts slipped nearly 44 percent, from 462,000 to 259,000, seasonally adjusted, from October to November. Single-family new starts declined by a smaller margin, down about 4.1 percent, from 863,000 to 828,000. Overall new starts declined 18.7 percent.

High-Performance October

October had been a banner month for new housing construction, with 1,340,000 new starts overall, the fastest new-start pace since August 2007. November’s new-start numbers are a setback, but are higher than September’s numbers, which still represent the lowest residential new-start levels of calendar year 2016.

Single-family new starts were up slightly—5.3 percent—compared with prior-year numbers. Multifamily starts, though, were down more than 30 percent from November 2015 numbers.

Permits Down Slightly

Permits for future construction, a bellwether of future construction performance, were down slightly overall, at 1,201,000, a 4.7 percent drop from October. But permits for single-family residences rose to a nine-year high of 778,000, a slight increase from October, and permits for smaller multifamily residences—two to four units—jumped 30 percent.

home construction
© iStock.com / ArtBoyMB

Permits for single-family residences rose to a nine-year high of 778,000, a slight increase from October.

Permits for single-family and smaller multifamily residences were also up from prior-year numbers, while permits for larger multifamily buildings were down 26.4 percent from November 2015.

Regional Breakdown

New starts had surged in the Northeast in October, to 167,000, but scaled back down by more than 50 percent in November, the biggest drop in residential starts in any of the four regions designated by the Census Bureau. (The others are Midwest, South and West.) Single-family new starts were notably up 19.8 percent in the Midwest.

Total permits in the Northeast region were up 2.8 percent from October to November, while single-family permits were down 6.8 percent in the region over the same period, meaning that multifamily construction permits increased. Other areas where permits increased were single-family construction in the Midwest (up 7 percent) and single-family construction in the West (up 2.7 percent).

Industry Insights

"Single-family starts declined from a robust level in October but still remain very solid," said National Association of Home Builders Chief Economist Robert Dietz. "Though rising mortgage rates could be a headwind for housing, we expect single-family production to continue on a long-run, gradual growth trend.

"Meanwhile, the multifamily sector, which has been volatile in recent months, is expected to level off at a solid rate as that market finds balance between supply and demand."

   

Tagged categories: Condominiums/High-Rise Residential; Market trends; Multifamily; Residential Construction; Trends

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