Multifamily Starts See Increase, For Now
- Feb 17, 2010
Dees Stribling, Contributing Editor
Washington, D.C.–According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, homebuilding starts increased 2.8 percent in January 2010 to a seasonally adjusted annual rate of 591,000 units, led by a jump in multifamily construction. Applications for building permits, however, dropped during the month by 4.9 percent.
Among regions, only the Midwest experienced a decline in housing starts last month, down 3.2 percent. The Northeast saw the largest increase in starts, some 10 percent, while the West registered an 8.9 percent gain and the South a 1 percent gain.
Though both single-family and multifamily starts increased for the month, single-family starts posted a 1.5 percent gain, while multifamily starts posted a 9.2 percent gain, to 107,000 units. “Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said National Association of Home Builders chairman Bob Jones in a statement on Wednesday.
But neither single-family or multifamily starts are likely to increase at a dramatic pace in the months ahead. The Census Bureau and HUD also reported that building permit issuance, the prime indicator of near-future building activity, fell 4.9 percent. The drop was entirely owing to a 23 percent decline in multifamily unit permits (single-family permits were up a minuscule 0.4 percent in January).
“A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy,” said Jones.
Mark Obrinsky, vice president of research and chief economist of the National Multi Housing Council (NMHC), agrees with that assessment, as it applies to the multifamily housing sector. “Multifamily housing starts have fallen to historic lows mainly due to the shortage of construction financing,” he tells MHN. “Unless lending by commercial banks revives–or some other source is found that can step in for the banks–multifamily starts are not likely to rise much from current levels.”