Wednesday, October 19, 2011

Multifamily housing starts in US West surge

Multifamily housing starts in the West Census region of the US, which includes Colorado, rose 73 percent from September 2010, showing the highest total in multifamily starts since April of 2007. Single-family housing starts were up 1.3 percent from September 2010 to September 2011, while the combined total for both single-family and multifamily units were up 26.4 percent during the same period.

According to new housing construction and housing starts data released today by the US Census Bureau, there were approximately 14,800 housing units started in the West during September 2011. Of the new units started, 7,700 were single-family structures and 7,100 were structures containing more than one housing unit.

Nationally, housing starts overall increased 13.3 percent during the same period, with total housing starts rising to a total of 60,100.

Total housing starts remain well below peak levels both nationally and in the West. September 2011 housing starts in the West were 72 percent below the peak reached during May 2004. Nationally, September 2011 was 69 percent below peak levels. The national peak in housing starts was reached during May 2005.

Multifamily starts have rebounded more than single-family starts. In the West, single-family starts are 83 percent below peak levels while multifamily starts are only 29 percent below peak levels.

The West census region includes California, so given the size of the West census region, the fact that total housing starts are at 14,800 indicates that new home construction continues to be very light throughout the region. Housing starts totals ranging from 35,000 to 45,000 were common from 2004 to 2006. However, most of this decline was driven by drops in single-family activity, and not by large drops in multifamily activity.

The first graph shows the difference between single-family starts and starts for structures with more than one housing unit in the West region. Single-family starts rose 1.3 percent from September 2010 to September 2011. Starts for structures with more than one unit rose by 73 percent during the same period, rising from 4,100 units during September 2010, to 7,100 units during September of this year.

The second graph shows month-by-month comparisons in housing starts for each year in the West. September's housing-starts total increased from August to September. Over the past decade, starts have often fallen from August to September, so this year's month-over-month increase from August to September indicated a little bit of strength month to month. September 2011's total is now at a four-year high for September, but remains well below totals reported from 2003 to 2007.

More sustained growth was visible in starts for structures with more than one housing unit. As can be seen in the third graph, September's total was significantly higher than September 2010, and is at a six-year high.

Starts for buildings with more than one unit were relatively numerous in September, showing a continued trend of growing activity in multifamily construction. Single-family starts showed signs of life as well, but were far more restrained than was the case in multifamily starts.

We can also note that the surge in multifamily starts is reinforced by recent increases in new multifamily permit data as well.