Annual multifamily permitting took quite a dive recently. According to the latest U.S. Census figures, the seasonally adjusted annual rate (SAAR) for multifamily permits totaled 360,000 units in June, down almost 21% from the annual rate from May (454,000 units) and 13.3% lower than the annual rate seen in June 2018. This was only the third time in the previous 16 months that the annual multifamily permitting rate fell below 400,000 units.
Meanwhile, annual multifamily starts came in at 396,000 units, about 9% below last month’s annual rate, but 25.3% greater than the June 2018 figure. June was the first month since December 2016 that annual multifamily starts exceeded multifamily permits. Usually starts trail permits due to their lead-lag relationship and the differences in survey methods and composition. Over the past 12 months, annual multifamily permits have averaged 430,000 units while multifamily starts have averaged 360,000 units.
Single-family permitting in June was about even with May’s annual rate at 813,000 units, but 4.7% lower than the 12-month rate from June 2018. The current SAAR is slightly below the 12-month average annual rate of 828,000 units. Annual single-family starts also exceeded permits at 847,000 units in June. Single-family permits and starts are usually very similar, with variations primarily due to the volatility of the smaller sample in the starts survey.
Total residential permitting levels are still averaging between 1.2 million and 1.3 million units, as they have since 1959. Total residential starts averaged 1.2 million units in the past 12 months. Multifamily completions slowed to 283,000 units in June, down 14.0% from May and 17.3% below the June 2018 figure.
Annual multifamily permitting decreased in all regions in the past year, with the sharpest slowdown in the South (-17.8%) and Northeast (-14.8%) regions. The Midwest declined by 10.6% and the West slowed 6.2% from last year’s pace. The volume of permits in each region fell below their respective 12-month averages in June, although the small and volatile Northeast region saw an increase in its annual rate over May’s figure.
Unlike permits, multifamily starts were down in only the West region (-10.0%). Starts were up by about a third in the South (33.8%), about half in the Midwest (49.5%), and were nearly double the previous year’s annual rate in the Northeast (92.1%). The SAAR for starts in June were above their average rate for the preceding 12-months for all but the West region, although it was above 100,000 units for the third month among the past four.
At the metro level, all but one of last month’s top 10 permitting markets remained the same and a few changed places. The top four remained the same with New York, Houston, Dallas, and Seattle returning in order. Washington, DC and Los Angeles switched positions to #5 and #6 while Minneapolis-St. Paul and Austin switched to #7 and #8. Atlanta returned in the #9 spot and Chicago edged Orlando out of the #10 spot this month by only six units.
Half of the top 10 markets experienced increases in annual multifamily permitting from last year, as Houston, Washington, DC, Minneapolis-St. Paul, Atlanta, and Chicago increased their multifamily permitting momentum. The remaining five top 10 markets saw declines in permitting of from -1.6% to -33.4%. In net units, Houston permitted almost 9,400 more multifamily units than the preceding 12 months and Minneapolis-St. Paul jumped almost 3,800 units. Washington, DC, Atlanta and Chicago increased their permitting totals by roughly 400 to 1,600 units. The largest declines among the top 10 occurred in Los Angeles (-5,717 units), and Dallas (-2,663 units).
Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors
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