Single-Family Permits Continue to Dominate in December

Despite the ongoing economic turmoil caused by the COVID-19 pandemic, the U.S. housing market continues to chug along. New multifamily construction has maintained a surprisingly steady pace of building permits over the past six years, and single-family construction is surging.

According to the U.S. Census Bureau’s monthly building permits survey, 437,000 multifamily units were permitted in 2020, almost exactly matching the average annual level since 2015 (438,000 units). December’s annual total was 2% less than November’s 12-month total and 7.8% below 2019 volumes.

Meanwhile, multifamily starts dropped 15.2% from November’s pace to 312,000 units and were down 40% from the annual total from 2019. Multifamily starts from 2020 were well below the six-year average of 374,000 units.

The continuing surge in single-family construction, however, is the real story. The 2020 totals for both single-family permitting (over 1.2 million homes) and starts (1.3 million homes) were at 15-year peaks. The last time single-family permits and starts were this high was back in September 2006. Both series exhibited month-over-month gains in their annual totals of about 8% to 12%. Compared to 2019, single-family permits were up an incredible 30.4% while starts were up 27.8%.

The annual rates for both multifamily and single-family completions increased on a month-over-month basis with multifamily completions up 32.3% to 422,000 units and single-family up 10.2% to 984,000 units from November. Multifamily completions were up 5% from last December, while single-family completions increased 9% for the year.

With a mixed performance for single-family and multifamily permitting, total U.S. residential building permits were up 4.5% from November and up 17.3% from last December. Total residential starts were up almost 6% for the month and were up 5.2% for the year. With the recent surge in single-family permitting and somewhat elevated level for multifamily permits, total residential permits exceeded 1.7 million units for the first time since the waning days of the housing bubble.

Annual multifamily permitting was down or flat in three of the four regions, with declines of 36.4% in the Northeast (to 56,000 units) and 7% in the South (to 169,000 units). The Midwest region held steady (+0.4%) from last year’s pace at 69,000 units, while the West region experienced an increase of 5.3% to 145,000 units in 2020. The monthly change in annual rates by region mirrored these trends.

Regional annual multifamily starts were down in all regions. The Midwest and Northeast regions each had deep declines of 72.1% and 66.8%, coming down to 19,000 and 23,000 units, respectively. The South and West regions had annual multifamily starts slow by 33.5% and 24% to reach annual totals of 140,000 and 129,000 units.

At the metro level, all of the top 10 permitting markets in December returned to the list from November but several changed places. New York remained the top permitting metro in the nation with about 34,600 units permitted. However, the Big Apple has seen its annual permitting total slide by more than 4,600 units from last year’s pace. This was one of the steepest declines in the nation. Houston retook the #2 spot from Austin with 19,858 multifamily units permitted as Austin’s annual total dipped for the month, to about 18,800 units.

Phoenix and Los Angeles returned in the #4 and #5 spots with 14,029 and 12,823 units, while Seattle leapt over Minneapolis-St. Paul and Nashville-Davidson to the #6 spot with 11,414 units. Washington, DC moved up to the #9 spot with an increase of nearly 2,500 units to nearly match Minneapolis’ and Nashville’s pace of about 11,000 multifamily units permitted.

Dallas continued to slip in its top 10 standing, falling into the #10 spot in December with 10,343 units permitted. The City of Dallas has been having difficulties with its permitting system, exacerbating Big D’s decline.

The strongest annual increases in multifamily permitting among the top 10 were in Austin (+5,265 units), Phoenix (+4,396 units) and Nashville (+2,736 units).

Other markets that saw significant year-over-year increases in annual multifamily permitting in 2020 were Columbus, OH (+2,415 units), Sacramento (+1,592 units), San Diego (+1,513 units) and Baltimore (+1,008 units).

Dallas’ decline in annual multifamily permitting again led all markets with a decrease of 7,091 units. Tampa and New York saw declines of about 4,700 units each. Among the top 10 markets, Washington, DC and Seattle also logged declines, of about 2,500 to 3,500 units.

Significant slowing in annual multifamily permitting also occurred in Fort Worth (-4,513 units), Portland, OR (-3,293 units), Chicago (-3,190 units) and Atlanta (-3,074 units).

Half of the top 10 markets had fewer annual multifamily permits than the previous month, with Austin experiencing a 7.3% decline from November’s annual rate, and the remainder declining about 2% or less. Washington, DC’s annual multifamily permitting shot up 10.4% from last month, while Phoenix and Los Angeles had moderate increases of about 5%.

The annual total of multifamily permits issued in the top 10 metros – 155,219 – was 5.9% less than the 164,994 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 #43 ranked metros.

There was very little change in the list of top 10 permit-issuing places from November, with all of the top 10 places returning and only a few changing places. The list of top individual permitting places (cities, towns, boroughs, and unincorporated counties) generally includes the principal city of some of the most active metro areas.

The top six permitting places returned in the same order with the cities of Austin, Houston, Nashville, Los Angeles, and Phoenix continuing to lead the list, along with the borough of Brooklyn. Unincorporated Harris County in the Houston area plunged from #7 to #10 in December moving the borough of Queens up one spot.

The smaller market of Columbus, OH jumped up to #8 from #10 last month with more than 5,300 multifamily units permitted in 2020 while the city of Seattle remained at #9 with almost the same amount.

Despite holding their positions in the top 10 list, the city of Austin had a decrease of more than 2,200 units from last month’s annual pace and Brooklyn permitted almost 2,600 fewer multifamily units than the annual total last month.