Despite continuing headwinds for multifamily development such as increased labor and material costs, construction delays, and other COVID-related difficulties, the number of multifamily building permits and starts increased again in November.
Roughly 560,000 multifamily units were permitted in November’s seasonally adjusted annual rate, according to the U.S. Census Bureau. This was an increase of 6.1% from October and a 15% jump from last year. Meanwhile, 491,000 multifamily units were started for the same period, up 12.1% from the (downwardly revised) October annual rate, and a 39.1% increase from November 2020.
Because of the severe dampening effect on the single-family market of the housing bubble bust and financial recession from 2009 to 2014, multifamily filled a lot of the void in housing demand, especially as renting became more of a lifestyle choice. The rates for both multifamily permits and starts have been trending upward since the end of the Great Recession but that trend has been less pronounced since about 2015 as single-family development has regained footing.
Single-family permits increased 2.7% from October to 1.103 million units but are down 4.5% from last year. Compared to last month, single-family starts surged 11.3% but are just below last year’s pace (-0.8%) at 1.173 million units in November. After a post-pandemic bounce, both single-family permits and starts are basically running along their respective long-term trend lines.
Together, total residential permits were up 3.6% from October to 1.712 million units and total residential starts were up 11.8% to 1.679 million units. Compared to one year ago, total residential permits were almost unchanged at 0.9% growth while total starts were up 8.3%.
Multifamily completions were up almost 20% from last month to 364,000 units on a seasonally adjusted annual basis, while single-family completions of 910,000 units were essentially unchanged from last month’s annual rate. Multifamily units authorized but not started are at their highest level (118,000 units) since the survey began in 1999. Delayed single-family units are also at high levels (152,000 units) not seen since the end of the housing bubble in 2005.
The annual rate for multifamily permitting was up in two of the nation’s four Census regions, with the largest annual increase in the West (up 51.7% to 183,000 units). The South’s annualized rate increased 19.7% to 245,000 units from last November. The Midwest region’s annual rate decreased 15.8% to 63,000 units, while the small Northeast region experienced a 20.3% decline in multifamily permitting to 70,000 units. Compared to the previous month, permitting was up in the Northeast (31%), South (18.1%), and West (2%) but down in the Midwest (-28.9%).
Regional annual multifamily starts were up significantly in the South (+59.6% to 228,000 units), West (+44.2% to 131,000 units), and Midwest (+39.7% to 71,000 units, while the Northeast region had a moderate decrease of -11.4% to 60,000 units. Compared to October’s pace, the South (32.3%) and Northeast (26.8%) regions had solid increases in starts, while the West (2.9%) had a much more modest gain. The Midwest saw multifamily starts decline by 21.3% from last month’s annual pace.
At the metro level, nine of the top 10 permitting markets returned to the November list from October with the first four in order and a few others changing places. New York continues to lead the nation in multifamily permitting with 33,814 units, up about 1,500 units from last month’s annual pace but down about 1,400 units from last year. Austin again ranked #2 with 24,574 units permitted, up more than 6,100 units from last November but about even with last month.
Dallas again ranked #3 with 18,021 units permitted, an increase of about 7,500 units annually but also close to last month’s figure. Seattle returned at the #4 spot this month with 17,267 units permitted, an increase of 5,800 units from last year and an increase of 1,400 units for the month.
Denver (#5 from #9) and Phoenix (#6 from #8) each moved up on the top 10 list with about 15,200 to 15,700 units permitted, but Phoenix grew by 2,000 units or 15% from last year while Denver doubled the previous pace with about 8,000 additional units permitted than in 2020.
Los Angeles’ and Houston’s decline on the top 10 list to #7 and #8, respectively, is a function of the rise of Denver and Phoenix, as both of these markets permitted around 15,000 units each for the year, close to the same amount as last month.
Philadelphia moved onto the top 10 list in November, replacing Minneapolis-St. Paul at #9 with 13,985 units permitted, almost 7,000 units more than one year ago and a jump of 1,500 units from October.
Washington, DC remained at the #10 spot with 13,886 units permitted, almost 3,600 more than in 2020 but about even with last month.
Eight of the top 10 multifamily permitting markets increased the annual totals from the year before and they were generally large increases, ranging from a low of 2,022 units in Phoenix to more than 8,100 additional units in Denver. In fact, half of the top 10 markets increased multifamily permitting by at least 5,800 units over last year’s pace. The remaining top 10 with increasing permitting averaged about 2,800 additional units permitted over last year’s totals.
Other markets outside of the top 10 that saw significant year-over-year increases in annual multifamily permitting in the year-ending November were Orlando (+4,537 units), Raleigh/Durham (+3,945 units), Jacksonville, FL (+3,711 units), Charlotte (+3,218 units), and Fort Worth (+2,822 units).
Only two of the top markets saw decreases in the year-ending November 2021. Houston permitted 4,560 fewer units than last year and New York’s annual permitting fell by 1,435 units. Significant slowing in annual multifamily permitting also occurred in the non-top 10 markets of Cape Coral-Fort Meyers, FL (-2,542 units), San Jose (-2,335 units), Lubbock, TX (-1,305 units), and Columbus, OH (-1,225 units).
Nine of the top 10 markets had more annual multifamily permits than the previous month, with Philadelphia jumping 12.3% and Seattle and Denver both up about 9% from October’s annual total. New York and Phoenix were up roughly 4.5% from last month, while Austin, Dallas, Los Angeles, and Washington, DC improved by less than 1%. Houston was down slightly (-0.3%) from the annual rate in October.
The annual total of multifamily permits issued in the top 10 metros – 182,402 – was about 25% more than the 145,431 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 #36 ranked metros.
All of last month’s top 10 permit-issuing places returned to this month’s list with the first seven remaining in the same order. 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 returned as the #1 permit-issuing place with 13,334 units, up about 475 units from last month. The city-county of Nashville-Davidson and the city of Los Angeles returned in order, permitting 12,014 units and 11,192 units, respectively. The cities of Seattle, Denver and Houston remained in the #4 through #6 spots but only the city of Seattle had a significant increase in annual permitting over last month (+1,813 units).
Mecklenburg County (Charlotte) returned at the #7 spot with 7,229 units permitted, however, that was 448 units fewer than last month. Phoenix jumped over the boroughs of Brooklyn and The Bronx to rank #8 with 6,824 units permitted, pushing New York’s most active boroughs down to #9 and #10 with about 6,500 units permitted apiece.
In addition to the cities of Austin and Houston, the cities of Dallas, San Antonio, and Fort Worth and unincorporated areas of Travis (Austin) and Harris (Houston) counties take seven of the top 20 permit-issuing places in November. Florida had three spots in the top 20, while California, North Carolina, and New York each had two. With the exception of Tennessee (Nashville-Davidson), the remaining top 20 multifamily permitting places are in western states (Arizona, Colorado, and Washington).