In a sign that the current torrid pace of apartment development may be slowing, multifamily permitting dropped to its lowest annual rate since early-2021, coming out of the pandemic lockdown period in mid-2020.
The seasonally adjusted annualized rate of multifamily permitting in November fell by almost 18% from October’s rate to 509,000 units, according to the U.S. Census Bureau’s monthly report.
Meanwhile, single-family permitting has declined for nine consecutive months, from an annualized rate of 1.2 million homes in February of this year to just 781,000 units in November. Year-over-year, single family permitting is down almost 30% while multifamily permitting is down about 11%.
However, the annualized rate for multifamily starts increased 4.8% from October to 584,000 units, which was also up from last year’s pace by 24.5%. Single-family starts have also been declining since February, to an annualized rate of 828,000 units, about 32% below last year and 4.1% less than last month.
Construction delays are continuing, primarily for multifamily projects, as year-over-year multifamily units authorized but not started increased 28.9% from November 2021 to 147,000 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 at 143,000 units.
Despite these construction delays, the number of multifamily units under construction (915,000 units) currently exceeds that of single-family (777,000 units) and has since May. Multifamily completions decreased 3.2% year-over-year but are up almost 16% from October’s annual rate to 430,000 units. Fair weather in November allowed single-family completions to jump by more than 9% both for the month and year, to 1.047 million units.
The annual rate for multifamily permitting was up strongly in the Census’ Midwest region (up 42.4% to 84,000 units) and increased moderately in the South (up 5.1% to 266,000 units). The Northeast (down 36.7% to 50,000 units) and West (down 39.1% to 109,000 units) accounted for the big drop in multifamily permitting nationally. Compared to the previous month, permitting was down in three regions, with only the Northeast region showing an increase from October.
Multifamily starts were up in three of the four regions, with big increases in the Midwest (54.2% to 115,000 units) and South (40.1% to 302,000 units). Starts in the West were up 12.5% (to 148,000 units) but were down significantly in the Northeast region (down 61% to just 18,000 units. Compared to October’s SAAR, starts were down in the Northeast and flat in the West but up in the Midwest and South.
Metro-Level Multifamily Permitting
All but one of the top 10 markets from October’s list returned in November with the first four remaining in order. New York continues to lead the nation in multifamily permitting, totaling 37,966 units through November, up by more than 3,800 units from last year but about 2,700 fewer than in October.
Houston returned at #2 with 27,908 units permitted, an increase of 13,037 units from last year and the second-highest annual increase after Atlanta. Austin held the #3 spot again with 23,890 units permitted, about even with the previous year’s total, while Dallas remained at #4 with 22,098 units permitted, more than 3,400 units greater than last November.
Atlanta continues to climb the list, switching places with Washington, DC at #5 and #6 with 19,748 units permitted, 13,634 units more than the previous year. Washington, DC’s 19,729 units through November was more than 5,800 units greater than the year before. Phoenix and Seattle returned in the #7 and #8 spots with 17,629 units permitted in Phoenix (up 2,453 units), while Seattle slowed by 250 units to 16,925 units.
Los Angles moved up to #9 in November with 16,801 units permitted and Minneapolis-St. Paul moved onto the list at #10 with 15,772 units permitted. Each were up a few hundred units than the year before. Philadelphia dropped off the top 10 list as its policy-induced permitting bulge continues to diminish.
Eight 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 1,758 units in Los Angeles to 13,634 additional units in Atlanta. Five of the top 10 markets increased multifamily permitting by at least 3,400 units over last year’s pace. Only Austin and Seattle had modest decreases from last year.
Other markets outside of the top 10 that saw significant year-over-year increases in annual multifamily permitting in the year-ending November were Tampa (+7,660 units), San Antonio (+4,510 units), Indianapolis (+3,137 units), Richmond (+2,616 units), and St. Louis (+2,059 units).
Significant slowing in annual multifamily permitting occurred in Nashville (-8,142 units), Philadelphia (-2,023 units), Charlotte (-1,511 units), Huntsville (-1,491 units), and Orlando (-1,342 units).
The annual total of multifamily permits issued in the top 10 metros – 218,466 – was about 26% more than the 173,452 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 #38 ranked metros.
Below the metro level, all of last month’s top 10 permit-issuing places returned to this month’s list with the six remaining in the same place 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 remained in the top spot with impressive permitting total of 15,913 units. The unincorporated portion of Houston’s Harris County displaced the city of Philadelphia at #2 with 12,007 units permitted, while the city of Philadelphia was close behind with 11,573 units permitted for the year.
The cities of San Antonio, Houston and Atlanta returned in the #4 through #6 spots again, with close to 9,000 units permitted each. The cities of Phoenix and Denver switched places at #7 and #8 with about 8,000 units permitted apiece.
Unincorporated Hillsborough County (Tampa) returned at #9 with 6,926 units permitted and the city of Raleigh retained the #10 spot with a total of 6,411 units permitted for the year-ending November 2022.
The cities of Austin, Philadelphia, and Denver were the only top 10 permitting place on November’s list to see a decline in permitting from October’s annual total.
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