Multifamily Starts Show Monthly Surge, Annual Decline

Washington, D.C.--New multifamily units started nationwide in May were at an annualized rate of 112,000 in May.

Dees Stribling, Contributing Editor

Washington, D.C.–Multifamily starts, which are notoriously volatile on a month-to-month basis, gyrated upward again recently, posting a 38.3 percent increase in May compared with April at a seasonally adjusted rate, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The report measures structures with five or more units.

All together, new multifamily units started nationwide in May were at an annualized rate of 112,000 in May, compared with 81,000 in April. For all of 2009, a total of 97,300 units were completed in residential properties with five or more units, according to the report; that compared with a total of 266,000 in 2008.

Other, less volatile, measurements show that multifamily starts will probably end 2010 about as sluggish as 2009. Compared with May 2009, last month’s multifamily starts were off 17 percent. For the first five months of 2010, multifamily starts were down 31.7 percent compared with the same period in 2009, though that change probably had as much to do with the difficult winter of ’10 in some parts of the country as economic conditions.

Multifamily permitting, a more forward-looking development measurement, gained ground both monthly and year-over-year, according to HUD and the Census Bureau. Permits issued for structures with five or more units experienced an uptick of 9.3 percent in May 2010 compared with April, and were up compared with May 2009 by 13.6 percent. For May 2010, multifamily permitting was at an annualized rate of 117,000 units.

On the other hand, for the first five months of 2010, 17.8 percent fewer permits for multifamily development (five units or more) were issued than during the first five months of 2009. All together in 2009, permits for 121,100 multifamily units were issued nationwide, compared with 295,400 the year before.

The report was part of a broader monthly survey of U.S. housing trends. Single-family starts dropped 17.2 percent in May compared with April, which was widely seen as the industry’s reaction to the expiration of the federal homebuyer tax credit at the end of April. Counting single-family housing and multifamily properties of all kinds, housing starts were down 10 percent in May compared with April.