Multifamily Starts Indicate Sustained Recovery

by Paul Emrath — Eye on Housing

The Census Bureau’s preliminary estimate for starts in buildings with five or more units in January came in at 175,000 (at a seasonally adjusted annual rate)—up 14 percent from the revised rate for December.  About half of January’s increase was due to a 7 percent downward revision to the starts rate for December.

Due in part to the influence of large structures, the monthly five-plus starts series has always been somewhat volatile.  The 3-month moving average for five-plus starts was 188,000 in both December and January, and has been fairly consistent and above 180,000 for five straight months now.   Most insiders will view this as a positive sign of a sustained recovery, given the historic low point from which the industry is struggling to recover.

The Census Bureau’s preliminary estimate of total five-plus starts in 2011 is 167,000, which would be up 60 percent from 2010.

Meanwhile, the seasonally adjusted rate at which new five-plus permits were issued in January was 208,000—little changed from December and high enough to suggest that the recovery in five-plus starts is sustainable.  During a 3-year period that began in November 2008, the five-plus permit rate remained below 200,000 (and sometimes even dipped below 100,000), but has now been above 200,000 for three consecutive months.

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