Multifamily Housing Starts Still in Doldrums

Multifamily construction, it seems, remains volatile even during the economic recovery.

Dees Stribling, Contributing Editor

Washington, D.C.–According to U.S. Department of Commerce, starts for multifamily dwellings (more than five units) occurred at an annualized rate of 68,000 in April, a considerable downward swing from the annualized rate of 95,000 in March–which itself was an upward swing of nearly 20 percent from February. Multifamily construction, it seems, remains volatile even during the economic recovery.

“April starts of multifamily housing units were a decline from March and the third-lowest figure in the history of the series,” Mark Obrinsky, chief economist and vice president of research at the National Multi Housing Council, tells MHN.

But he adds that a closer look at recent multifamily-starts reveals that the month-to-month volatility is masking the fact that starts aren’t really advancing or declining that much. “Using the three-month or six-month moving averages–which is helpful to smooth out the ‘noise’ in the monthly data–both show starts essentially unchanged from last fall,” Obrinsky says.

Some 5,600 multifamily units were started in April 2010. That compares with 6,600 units in April 2009, but 25,700 units in April 2008.

Building permits for multifamily construction, a measure of near-future activity, came at an annualized rate of 103,000 in April, which also represents little change over recent months. “With construction financing still hard to come by, little improvement can be expected in new multifamily construction in the near future,” Obrinsky predicts.

Provided those annualized figures hold at around 100,000 for all of 2010, that would put multifamily starts roughly on par with 2009, which saw the start of 97,300 multifamily units in structures of five or more units, according to the Department of Commerce. Last year’s starts represented an expected drop from 2008, when 266,000 multifamily units were started.

The multifamily figures for April 2010 came against a more widely publicized increase in single-family housing starts for the month, presumably inspired by contracts inked to take advantage of the federal homebuyer tax credit, which expired at the end of April. The annualized rate for single-family home starts in April was 593,000, or 10.2 percent more than the revised March figure.