More than a half-million multifamily units were permitted for construction in the U.S. over the past year, the most since 2015, according to U.S. Census figures for August.
While the national number climbed to recent highs, several of the top permitting markets are seeing shifts in the number of total issuances.
Multifamily permitting activity came in at a seasonally adjusted annual rate (SAAR) of 509,000 units in August, only the fourth time above 500,000 units in the past decade. Multifamily building permits were 27.3% higher than one year ago and almost 15% greater than in July. Over the past 12 months, seasonally adjusted annual multifamily permits have averaged 438,000 units.
Following the increase in permits, multifamily starts hit 424,000 units in August, well above the 12-month average of 360,000 units. Starts grew by more than 30% from July and 13.7% from August 2018.
The increase in activity in August wasn’t limited to the multifamily side of housing. Single-family starts were 919,000 units, about 50,000 homes greater than the SAAR for single-family permits of 866,000 units. Starts were up 3.4% from last year and 4.4% over July, and permits rose 4.5% for both the month and year.
Together, these figures pushed residential building permits and starts to 12-year highs at more than 1.42 million units and 1.36 million units, respectively.
With the higher annual rates over the past few months, total residential permitting levels are averaging about 1.3 million units, in line with the long-term average going back to 1959. Total residential starts averaged 1.2 million units in the past 12 months.
On an annual basis, multifamily building permits were up in all regions of the country, with the small Northeast region jumping 67% from last year to about 86,000 units. The South jumped by almost 32%, exceeding 240,000 units for the first time in more than a year. The West region increased multifamily permitting by 14.7% from August 2018, while the Midwest inched up 2.3%.
Multifamily starts were down in the West region (-18.0%), but were up sharply in the South (26.2%) and modestly in the Midwest (4.6%). Again, the small Northeast region experienced a significant increase in multifamily starts compared to one year ago, more than doubling to 60,000 units. Multifamily completions slowed in the South (-10.0%), but were up by double digits in all other regions.
At the market level, all of last month’s top 10 permitting metros remained the same with only two changing places. The top eight remained in the same order with New York, Houston, Dallas, Washington, DC and Seattle returning in the top five spots. Los Angeles, Austin, and Minneapolis-St. Paul round out the top eight while Atlanta and Chicago switched places in the #9 and #10 spots.
Half of the top 10 markets experienced increases in annual multifamily permitting from last year, as Houston, Washington, DC, Minneapolis-St. Paul, New York and Chicago increased their multifamily permitting momentum.
The remaining five top 10 markets saw declines in permitting from -2.5% to -21.8%. Most noteworthy are the double-digit declines in Dallas and Los Angeles. These markets have seen permitting activity slide for several consecutive months, suggesting a slowdown in apartment construction is on the horizon.
The largest unit declines among the top 10 occurred in Dallas (-4,682 units), Los Angeles (-3,449 units), Seattle (-1,953 units) and Austin (-913 units).
Houston permitted more than 10,000 more multifamily units than in the preceding 12 months. The year-ago permitting volume was held down by market weakness as it rebalanced following Hurricane Harvey.
Permits in Washington, DC and Minneapolis-St. Paul jumped about 3,500 units and 2,100 units, respectively. New York and Chicago increased their permitting totals by about 1,200 units each.
Other markets with at least 1,500 more multifamily permits issued than last year include Salt Lake City/Ogden, Richmond, Nashville, Tampa, San Antonio, Jacksonville and Philadelphia. Significant slowing of 1,500 or more units occurred in Raleigh/Durham, Oakland and San Diego.
The annual total of multifamily permits issued in the top 10 metros – 153,696 units – was 4.9% greater than the 146,448 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 #35 ranked metros.
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. Much like the top 10 metro list, the top 10 permitting place list includes many of the same 10 cities or permit-issuing place as last month. The city of Houston again led the nation for the year-ending August, but the city of Austin moved up to #2. Unincorporated Harris County (Houston) slipped to #3, while Charlotte’s Mecklenburg County and the city of Washington round out the top five.
Of the top permit-issuing places, Charlotte, San Francisco, Denver, San Antonio and Nashville did not see their metro areas make the top 10 list for permits by metro. Consistently placing in the top three for metro-level permitting, New York and Dallas had no permit issuing places in the top 10 as their apartment development pattern is more spread out among their suburbs.