The annualized rate of single-family permits and starts continues to tumble, according to the U.S. Census Bureau’s monthly report.
Single-family permitting has declined for eight consecutive months, from an annualized rate of 1.2 million homes in February of this year to just 839,000 units in October. Year-over-year, single family permitting is down more than 22%. Additionally, single-family starts have also been declining since February, to an annualized rate of 855,000 units, about 21% below last year. Both are below 900,000 units for the first time since the pandemic lockdowns.
Meanwhile, the annualized rates for multifamily permits and starts both plateaued from last month but are up from one year ago. Multifamily permitting reached 633,000 units in October, up 11.2% from last October, while multifamily starts increased 17.3% from last year to 556,000 units. With single-family construction slowing, multifamily now comprises more than 40% of all residential construction, a level not seen since 2015.
Construction delays for various reasons are continuing, primarily for multifamily projects, as year-over-year multifamily units authorized but not started increased 31.5% from October 2021 to 146,000 units. Also at 146,000 units, the number of single-family units authorized but not started has decreased slightly from the roughly 150,000-unit level earlier in the year but remains relatively high.
Because of these construction delays (coupled with slowing single-family starts), the number of multifamily units under construction (910,000 units) currently exceeds that of single-family (794,000 units) and has since May. Multifamily completions decreased 5% from September’s annual rate to 362,000 units. However, this annual rate is about 18% above last October’s completion rate. Single-family completions were down about 8% from September’s at 961,000 units but were up 2.7% from one year ago.
The annual rate for multifamily permitting was up strongly in the Census’ South region (up 43.5% to 342,000 units) and was flat in the Midwest (up 0.6% to 87,000 units). Meanwhile, the West region decreased by 18.3% to 150,000 units, while the small Northeast region slipped 10.5% to 56,000 units compared to last October. Compared to the previous month, permitting was down in three regions, with only the South region showing an increase from September.
Multifamily starts were up in half of the four regions, with a big increase in the South (49.9% to 286,000 units). Starts in the West were up 11.1% (to 160,000 units) but were down significantly in the Northeast region (down 30.8% to 41,000 units). The Midwest region declined 13.5% (to 71,000 units). Compared to September’s pace, the same three regions were down with only the South region showing an increase in starts for the month.
Metro-Level Multifamily Permitting
The increasing trend in multifamily permitting is reflected in the fact that all but two of the top 20 permitting markets increased their annual permitting through October compared to the same 12-month period one year ago. However, we may be seeing a plateau as almost half of the top 20 had fewer units permitted (on an annual basis) than one month ago.
All but one of the top 10 markets from September’s list returned in October with the first five remaining in order. New York continues to lead the nation in multifamily permitting, totaling 40,731 units through October, up by almost 8,200 units from last year.
Houston returned at #2 with 26,648 units permitted, an increase of 11,485 units from last year and the second-highest annual increase after Atlanta. Austin held the #3 spot again with 24,465 units permitted, about even with the previous year’s total, while Dallas remained at #4 with 22,355 units permitted, more than 4,000 units greater than last October.
Washington, DC rounded out the returning top five with 19,323 units permitted for the year-ending October 2022, up almost 5,500 units for the year. As mentioned, Atlanta increased annual permitting sharply from last year with 18,912 units permitted, more than 13,600 units greater than last October, moving into the #6 spot.
Phoenix moved up two spots from last month to #7 with 18,610 units permitted, up 28% or 4,072 units from last year, while Seattle slipped two spots to #8 with 18,170 units permitted. Still, that was 2,572 units greater than last October.
Philadelphia continues to slide down the top 10 list, landing at #9 in October with 16,929 units permitted but that was about 1,800 units more than the year before. Los Angeles replaced Minneapolis-St. Paul at #10 this month with a total of 16,397 multifamily units permitted, up 1,427 units for the year.
As mentioned, all of the top 10 multifamily permitting markets increased their annual totals from the year before and they were generally large increases, ranging from a low of 186 units in Austin to 13,616 additional units in Atlanta. Six of the top 10 markets increased multifamily permitting by at least 4,000 units over last year’s pace.
Other markets outside of the top 10 that saw significant year-over-year increases in annual multifamily permitting in the year-ending October were Tampa (+6,707 units), San Antonio (+4,732 units), Indianapolis (+3,604 units), Richmond (+3,459 units), Fort Worth (+2,308 units) and Kansas City (+2,301 units).
Significant slowing in annual multifamily permitting occurred in Nashville (-7,809 units), Charlotte (-2,599 units), Huntsville (-1,426 units) and Orlando (-1,003 units).
The annual total of multifamily permits issued in the top 10 metros – 222,540 – was about 31% more than the 169,618 issued in the previous 12 months. The total number of permits issued in the top 10 metros was almost equal to the number of permits issued for the #11 through #39 ranked metros.
Below the metro level, nine of last month’s top 10 permit-issuing places returned to this month’s list with the first three remaining in order and several others changing places. The list of top individual permitting places (cities, towns, boroughs, and unincorporated counties) generally include the principal city of some of the most active metro areas.
The city of Austin and the city of Philadelphia remained in the top two spots with impressive permitting totals of 15,990 units and 13,310 units, respectively. The unincorporated portion of Houston’s Harris County remained #3 with a permitting total of 11,575 units.
The cities of San Antonio and Houston switched places at the #4 and #5 spots again, with close to 9,000 units permitted each. The city of Atlanta moved up two spots this month to #6 with 8,514 units permitted, while the city of Denver returned at ##7 with a total of 8,131 units permitted. The city of Phoenix fell two spots to #8, permitting 8,015 units for the year.
Unincorporated Hillsborough County (Tampa) replaced Mecklenburg County (Charlotte) at the #9 spot with 6,031 units permitted and the city of Raleigh retained the #10 spot with a total of 5,963 units permitted for the year-ending October 2022.
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