Multifamily Starts Down More than 25% in June, But Highest Housing Construction Level Since November 2008
By Anuradha Kher, Online News EditorWashington, D.C.–Multifamily starts have fallen again; this time by more than 25 percent, according to the Commerce Department’s latest report. With no clear trend in sight, starts for June were at 101,000 units, which is a 28.6 percent drop when compared to May and a 74.8 percent drop year over…
By Anuradha Kher, Online News EditorWashington, D.C.–Multifamily starts have fallen again; this time by more than 25 percent, according to the Commerce Department’s latest report. With no clear trend in sight, starts for June were at 101,000 units, which is a 28.6 percent drop when compared to May and a 74.8 percent drop year over year. There was a brief uptick in May when starts were at 143,000 units over April’s 80,000 units. In January they were 118,000, February saw an increase to 204,000 but in March they were down again to 129,000 units. Overall however construction was started on more new homes in June than in any month since November. Privately owned housing starts (including multifamily and single-family) in June were at a seasonally adjusted annual rate of 582,000 units. This is 3.6 percent above the revised May estimate of 562,000, but is still 46 percent below the June 2008 rate of 1,078,000. Builders, especially of condominiums and apartments, are continuing to struggle to find financing, which is contributing to the drop in starts for multifamily housing.“There is a lot happening; there’s a lot of contradictory data and things are moving in different directions,” Greg Willet Greg Willet, vice president of research at MPF YieldStar tells MHN. “While the economy is still deteriorating, we are seeing signs that things are going to be okay. The apartment market is still on the downward slope, and recovery depends on what happens in the economy.” Everywhere in the country, there is minimal ongoing construction, and that situation will continue for a while. By 2010, the only exception will be Dallas, which will deliver 8,000 units. “Access to capital is a big problem, but past that, the challenge is that we have cut rents so significantly and no new development deals are going to pencil out at the rents we are getting. We think it’s going to be a while till we see some meaningful starts. Realistically, it’s going to be 2013,” adds Willet.