The seasonally adjusted annual rate (SAAR) for multifamily permitting dipped to 404,000 units in February, a 4.3% decrease from January and a 16% drop from January 2024. At the same time, annualized multifamily starts jumped 12.1% from January to 370,000 units, a 6.6% decrease from January 2024.
This is according to the latest report from the U.S. Census Bureau and the Department of Housing and Urban Development. A RealPage analysis of the data shows that the SAAR for multifamily starts, while generally trending downward, is more volatile than the nonseasonally adjusted data series for starts.
“Comparing the two series, the SAAR tends to overcount starts when they are on an upward trend and undercount them on the downward trend,” said RealPage. “However, the two series tend to be in closer alignment at the peak of the series, just as they appear to be in the past few months, perhaps indicating multifamily starts are approaching the trough for this cycle.”
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The annual rate for multifamily permitting decreased 72.1% in the Northeast region to 39,000 units, while approvals fell 22% in the West to 63,000 units. Meanwhile, the category spiked in the Midwest by 23.5% to 101,000 units and by 13.7% to 201,000 units in the South. Month-to-month, permitting was down in all but one of the Midwest Census regions.
Annually, multifamily starts decreased sharply in the Midwest region, down 66% to 28,000 units, and dropped moderately in the South, down 14.6% to 162,000 units. Starts were up in the Northeast by 61.4% to 53,000 units and up 40.3% in the West to 126,000 units. Month-over-month, February’s SAAR starts were down only in the Midwest region, according to RealPage.
The analysis said multifamily units under construction were down 21% from last January but have leveled off from last month to 754,000 units. Multifamily completions were down 20.7% for the month and 15.8% for the year to 512,000 units.
RealPage noted that higher home prices, interest rates, and building costs have also dampened single-family development. There was a 3.4% year-over-year decline in annualized permitting in February, with 992,000 homes, even with January’s SAAR. Annualized single-family starts decreased 2.3% from last February but increased 11.4% to 1.1 million units from last month. Single-family units under construction remained unchanged month-over-month at 640,000 units but were down 6.7% for the year.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
