Recent industry trends in building permits — a solid leading indicator of multifamily starts activity three to six months in the future — suggest that the market will remain relatively healthy over the balance of this year and into at least the early months of 2003. The total number of permits issued for construction in buildings with five or more units was a slight 0.7% greater during January-July 2002 than over the first seven months of 2001.
Multifamily permit trends were highly variable across different parts of the nation through July. Seven of the nine regions of the country saw permits for multifamily starts improve upon their levels for the comparable period a year earlier. In addition, almost one of every three permits (31.3%, to be precise) for multifamily construction during this period was issued in the South Atlantic region.
The largest percentage gains were recorded in New England and in the West South Central region (Texas, Oklahoma, Louisiana, and Arkansas). Multifamily work increased in Texas through July of this year, with 22,250 permits issued through the first seven months of 2002 — a 17.8% improvement over the comparable period of 2001.
Florida remained the nation's volume leader in multifamily construction permits through the first seven months of 2002, with 33,933 units permitted in multifamily buildings through July — a whopping 24.6% more than the same period of 2001.
The continued relative health of the multifamily sector — even in the face of the weak economy (resulting in lower household formation among 18- to 24-year-olds) — comes from demand generated by entry-level immigrant households and high-income households leaving single-family homes. In other words, from opposite ends of the multifamily demand spectrum.