Multifamily Permits and Starts Surge in August

Multifamily building permits and housing starts were both up sharply in August.

The seasonally adjusted annual rates for multifamily permits (which include both apartments and condominiums) were up 19.7% from July and almost 53% from August 2020 to 632,000 units, according to the U.S. Census Bureau. The more impressive bounce is from last month as permitting activity slowed during the early pandemic months last year, creating a lower base. Meanwhile multifamily starts were up 21.6% from July and 60.1% from last August to 530,000 units.

The total number of multifamily units permitted through August of 632,000 is the highest annualized rate since July 2015 and is more than 100,000 units greater than the average annual rate for the past 12 months. Meanwhile, the annualized multifamily start rate of 530,000 units is the highest since February 2020, just before the pandemic shutdowns.

Single-family permits were about even with the rate for July and from last August at 1.054 million units. Shortages of building materials, appliances, and labor are still suppressing the housing market despite high demand. Single-family starts were down 2.8% from July’s annual rate at 1.076 million homes but starts were up 5.2% from last August.

Together, total residential permits were up 6% from July to 1.728 million units and total residential starts were up 3.9% to 1.615 million units. The tiny plex 2-4-unit multifamily sector is also facing strong headwinds with permits dropping 22.2% from last month to 42,000 units.

Multifamily completions fell 17.8% from July’s annual rate to 356,000 units but are up by more than 14% for the year. Single-family completions increased 2.8% from last month and are up about 9% for the year at 971,000 units as shortages and delays continue to hinder robust home development.

Regionally, the annual rate for multifamily permitting was up from last year in all four regions, with the largest annual increase in the Midwest (up 71.6% to 79,000 units). The West’s annualized rate increased 55.7% to 187,000 units from last August while the South was up 51.5% to 291,000 units. The small Northeast region increased 34.8% to 77,000 units. Compared to the previous month, all regions gained as well, with the South (+35.4%) and Northeast (+30.8%) regions leading the way. The Midwest (+6.8%) and West (2.8%) had more modest gains in the annual permitting paces from last month.

Regional annual multifamily starts were up or nearly even in all regions compared to August 2020 with the small Northeast region quadrupling their meager pace one year ago to 113,000 units. The South was up 52% to 226,000 units and the West increased 37.9% from last August’s annualized rate to 114,000 units. The Midwest region was virtually unchanged from one year ago with 78,000 multifamily units started. Compared to July’s pace, the South (-1.5%) and West (-22.2%) regions declined while the Midwest (+103.3%) and Northeast (+406.7%) had strong increases in multifamily starts.

At the metro level, nine of the top 10 permitting markets in August returned to the list from July with the first six in order and a few others changing places. New York continues to lead the nation in multifamily permitting with about 34,500 units but the pace is slowing. Austin and Houston ranked #2 and #3 with Austin still increasing (up almost 50% to 25,245 units) from the annual rate one year ago, while Houston is down almost 19% from last year with annual permitting of 17,353 units.

Dallas and Seattle returned at #4 and #5 with about 15,800 and 14,800 units permitted, respectively – both up about 15% from the previous year. Los Angeles ranked #6 again this month with about 14,000 units permitted in the year-ending August, almost unchanged from last year. Philadelphia jumped from #10 in July to #7 in August with almost 13,600 units permitted, more than 8,500 units greater than the pace seen last year.

Phoenix and Washington, DC slipped one spot each to #8 and #9 with about 13,400 units permitted each but Washington, DC increased 27% from last year’s total, while Phoenix was virtually unchanged. Denver replaced Nashville on the top 10 list at #10 with almost 13,100 multifamily units permitted, up almost three-quarters from August 2020.

Six of the top 10 multifamily permitting markets boosted their annual totals from the year before and they were generally large increases, ranging from a low of 1,963 units in Seattle to more than 8,500 additional units in Philadelphia. Austin’s increase of more than 8,400 units was second only to Philadelphia and was more than twice the average increase for the remaining four top 10 markets with increasing permitting.

Other markets outside of the top 10 that saw significant year-over-year increases in annual multifamily permitting in the year-ending August were Jacksonville, FL (+3,374 units), Miami (+3,172 units), Raleigh/Durham (+2,791 units), and Boston (+2,063 units).

The declining half of the top 10 saw decreases ranging from 10 units in Phoenix to more than 3,300 units in Houston and New York. Significant slowing in annual multifamily permitting also occurred in the non-top 10 markets of Cape Coral-Fort Meyers, FL (-3,173 units), San Jose (-2,036 units), Kansas City (-1,969 units), and Portland, OR (-1,525 units).

All top 10 markets had more annual multifamily permits than the previous month, with Houston, Dallas, and Seattle experiencing a 10%+ increase from July’s annual rate, and Austin and Denver jumping about 8%, while the others increased by less than 5%.

The annual total of multifamily permits issued in the top 10 metros – 175,370 – was about 14% more than the 153,332 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 #37 ranked metros.

All last month’s top 10 permit-issuing places returned to this month’s list with eight 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 was once again the #1 permit-issuing place with 13,564 units, increasing by more than 1,700 units from last month. The city-county of Nashville-Davidson and the city of Los Angeles returned in order, permitting 11,863 units and 10,748 units, respectively.

The city of Houston came in at #4 on the list with about 8,800 units permitted, an increase of 505 units from July, while the cities of Seattle and Denver switched places from last month, topping 8,200 units for the year each. The borough of Brooklyn permitted almost 7,600 units for the year-ending August, ranking at #7.

The Bronx borough and the city of Phoenix remained at the #8 and #9 spots on the top permitting places list with close to 6,000 units permitted apiece, and Mecklenburg County (Charlotte) again rounded out the top 10 with 5,622 units permitted, only 15 units more than last year.

Texas still dominates the list of permitting places with Unincorporated Harris County (Houston), the city of Dallas, Unincorporated Travis County (Austin), the city of Fort Worth, and the city of San Antonio joining the city of Houston among the top 20 permit-issuing places.