Starts, Permits Indicate Relative Health of the Multifamily Sector

Starts, Permits Indicate Relative Health of the Multifamily Sector

by Paul Emrath

In February, the (seasonally adjusted) annual rate of starts  in buildings with five or more apartments was 233,000, according to the latest release from the Census Bureau’s Manufacturing and Construction Division.  This is a 29 percent increase from the January starts rate  (which was revised upward slightly) and more than double the starts rate for February 2011.   Although a rate of 233,00  still appears low compared to five-plus starts over the 1996-2007 period, it is far above the trough of 2009 and 2010 and provides an indication of the relative health of the multifamily sector. 

Meanwhile, the rate at which new five-plus permits were issued increased  3 percent increase in February, to 219,000—marking the fourth consecutive month that the five-plus permit rate has been above 200,000.  Improvement in the permit rate since 2010 suggests that multifamily production will remain relatively healthy going forward, although a five-plus starts rate as high as 233,000 may not be sustainable in the short run.

At the other end of the production pipeline, the rate of five-plus completions increased 4 percent in February, to 144,000.  As five-plus starts continue to outpace completions, the number of five-plus units under construction at any one time has been steadily climbing and is now above 190,000 for the first time since January 2010—a positive sign for any workers who may be relying on new apartment construction for employment.

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