Tuesday, December 20, 2011

November housing starts: multifamily starts surge in western US

Multifamily housing starts in the West Census region of the US, which includes Colorado, rose 286 percent from November 2010, showing the highest November total in multifamily starts in four years. Single-family housing starts were up 18.5 percent from November 2010 to November 2011, while the combined total for both single-family and multifamily units were up 76 percent during the same period.

According to new housing construction and housing starts data released today by the US Census Bureau, there were approximately 12,200 housing units started in the West during November 2011. Of the new units started, 6,400 were single-family structures and 5,800 were structures containing more than one housing unit.

Nationally, housing starts overall increased 27 percent, year over year, with total housing starts rising to a total of 51,800.

Total housing starts remain well below peak levels both nationally and in the West. November 2011 housing starts in the West were 77 percent below the peak reached during May 2004. Nationally, November 2011 was 73 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 86 percent below peak levels while multifamily starts are only 42 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 12,200 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 18 percent from November 2010 to November 2011. Starts for structures with more than one unit rose by 286 percent during the same period, rising from 1,500 units during November 2010, to 5,800 units during November of this year.

The second graph shows month-by-month comparisons in housing starts for each year in the West. November's housing-starts total increased from October to November, which is not reflective of the historical trend in which starts generally decline form October to November.

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

Starts for buildings with more than one unit were relatively numerous in November, 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.