While national multifamily permit levels remain above historical norms, development volumes in large metros suggest apartment construction activity could level out.
In September 2016, a total of 41,000 multifamily units were approved for construction by local governments across the country, according to the U.S Census Bureau. That monthly figure was up 21.0% from August 2016 and 18.8% from September 2015. With September’s authorizations, a total of 290,800 units have been permitted during 2016. That year-to-date count is down 13.5% from one year ago.
An observation of major markets suggests national permit volumes could continue to ease in the coming months. Sixteen of the 50 largest U.S. markets saw year-over-year declines for year-to-date figures. Pittsburgh led that roster, with a 67% drop. The Steel City appears to be normalizing after years of supply outpacing demand.
New York trailed Pittsburgh, slipping an unsurprising 62.9%. The disparity is largely a result of developers rushing to obtain permits ahead of tax incentive 421-a’s expiration in June 2015. The artificial inflation is expected to drive down year-over-year figures through the remainder of 2016. The second largest metro, Los Angeles, also experienced a decline. The West Coast hub saw year-to-date authorizations decrease 10.7% from September 2015.
Across all metros in September 2016, leaderboard players for actual year-to-date numbers remained largely unchanged from recent months.
Monthly figures proved more of a shakeup, with August 2016 front-runners like Miami, San Diego and Portland falling off the top-10 list. Phoenix joined the ranks with 1,518 new permits, a spike of nearly 300% over the same month in 2015. San Francisco registered equally impressive growth. The metro authorized 1,330 units, an increase of more than 200% over September 2015.
At the end of 3rd quarter 2016, 561,100 apartment units were under construction. That figure was down 0.9% from a year ago, according to MPF Research data.
According to a separate Census report, a total of 279,000 multifamily units started construction through September 2016. That figure is 5.6% fewer than in the first nine months of 2015.