Multifamily permit volume falls, but not off cliff
Through August of this year, 4.1 percent fewer permits have been issued for construction in residential buildings with five or more units than were issued over the first two-thirds of 1999. Multifamily permit trends have been highly variable across the nation in 2000, but some regions are continuing to add significantly to their current stock of apartments and condominium units.
Despite the decline in the U.S. total through the first eight months of 2000, seven of nine geographic regions actually saw permits for multifamily starts rise above their level of a year earlier. But within these regions, there were still usually more states recording declines than increases. Overall, 18 states in the nation recorded increases in multifamily permits for residential buildings with five or more units between January and August of 2000 when compared with the same period last year.
The sharpest regional gains (in percentage terms) were in the West North Central and in the Rocky Mountain states. Both Iowa (135.3 percent) and Missouri (116.1 percent) more than doubled their multifamily permit count through two-thirds of 2000-but permit totals declined in the other five states in the West North Central region. Similarly, permits for multifamily units rose sharply in Colorado (88.5 percent) and Arizona (14.3 percent) through August of this year, but fell in the other six states of the Rocky Mountain region. Multifamily permit volume also rose sharply during the first two-thirds of 2000 in three New England states: Massachusetts, New Hampshire and Maine, as well as in New York and Pennsylvania.
California has emerged as the volume leader for multifamily construction during 2000, after trailing Florida and Texas most of the past decade.
Rental vacancy rates remain relatively low nationwide. The second quarter 2000 national rental vacancy rate stood at 8 percent, a tenth-of-a-point lower than during 1999. However, the Northeast market remains very tight.
Multifamily building starts came in at a disappointing annualized rate of 270,000 units during August. This was down a sharp 15.9 percent from the July multifamily starts pace and the lowest monthly level since early in 1999. The August 2000 pace of new construction in the multifamily sector was 27.4 percent lower than August 1999.
Total housing starts through the first eight months of 2000 were estimated at 1,108,800 units-a moderate 2.9 percent drop from the total for January-August 1999. Through August 2000, single-family starts had faded to a level 3.9 percent below the total for the first two-thirds of last year. However, the number of units started in multifamily buildings was still up 0.9 percent from the eight-month total of a year earlier, so the market hasn't yet fallen off a cliff.