Despite Headwinds, Job Openings Rise

2023-05-31T10:20:18-05:00

The count of open, unfilled jobs for the overall economy moved higher in April, rising to 10.1 million and complicating the June Federal Reserve decision. The higher job opening count for April increases the chance of another rate hike despite some speculation that May was the end of tightening. The count of open jobs was 11.8 million a year ago in April 2022. The count of total job openings will fall in 2023 as the labor market softens and the unemployment rises, but the recent uptick complicates the inflation story. From a monetary policy perspective, ideally the count of open, unfilled positions slows to the 8 million range in the coming quarters as the Fed’s actions cool inflation. While higher interest rates are having an impact on the demand-side of the economy, the ultimate solution for the labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers. The construction labor market saw an increase for job openings in April, although we expect the broader lower trend to continue. The count of open construction jobs increased from a revised reading of 315,000 in March to 383,000 in April. These data points come after a data series high of 488,000 in December 2022. The overall trend is one of cooling for open construction sector jobs as the housing market slows and backlog is reduced, with a notable uptick in month-to-month volatility since late last year. The construction job openings rate increased from 3.8% in March to 4.6% in April. The recent trend of these estimates points to the construction labor market having peaked in 2022 and is now entering a stop-start cooling stage as the housing market adjusts to higher interest rates. Despite the weakening that will occur in later in 2023, the housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. Hiring in the construction sector slowed to 4.5% in April after a 4.9% reading in March. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a post-covid rebound took hold in home building and remodeling. Construction sector layoffs slowed to a 2% rate in April, after an elevated rate of 3% in March.  In April 2020, the layoff rate was 10.8%. Since that time, the sector layoff rate has been below 3%, with the exception of February 2021 due to weather effects. Looking forward, attracting skilled labor will remain a key objective for construction firms in the coming years. While a slowing housing market will take some pressure off tight labor markets, the long-term labor challenge will persist beyond the ongoing macro slowdown. Related ‹ Home Prices Rebound in MarchTags: economics, home building, housing, JOLTS, labor market, multifamily

Despite Headwinds, Job Openings Rise2023-05-31T10:20:18-05:00

Apartment Absorptions Slightly Weaker in Fourth Quarter of 2022

2023-05-25T08:22:02-05:00

Data from the Census Bureau’s latest Survey of Market Absorptions of New Multifamily Units (SOMA) indicates that multifamily market demand has softened as the percentage of apartments absorbed within the first 3 months of completion fell to 59.0% after six consecutive quarters of above 60.0% percent absorption. The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) fell two percentage points to 59.0% in the fourth quarter of 2022. The number of completions was down from the third quarter of 2022, from 85,830 to 82,190, while completions were up 18.0% from one year ago. The median asking rent for apartments increased from $1,821 in the fourth quarter of 2021 to $1,863 in the fourth quarter of 2022, a 2.3% increase over the year. This is the eighth consecutive quarter with a year-over-year increase in the median asking rent price. The condominium absorption rate (the share purchased in the first three months following completion) increased from the third quarter of 2022 by one percentage points to 78.0% while condominium completions decreased by 10.3% on a year-over-year basis from 5,760 in the fourth quarter of 2021 to 5,165 in the fourth quarter of 2022. The annual results for SOMA were also released for 2021. These results show that subsidized units make up a minority of all multifamily units completed. Total units completed in 2021 was at 363,700 units, with 323,900 of those units being unsubsidized and 39,760 units receiving subsidization or tax credit for completion. The share of units completed receiving a subsidy averages 9.9% per year between 2014-2021. Breaking the subsidized units out by the type of assistance, the data shows that the Low Income Housing Tax Credit (LIHTC) was the most often used program in 2021. The LIHTC assistance accounted for 24,280 units completed in 2021, slightly below the peak level of 24,930 in 2020 (note this estimate likely understates the full scope of the LIHTC program given the full uses of the credit). The section 8 program was used to complete 16,300 units in 2021 while other subsidized programs was used for 9,258 units. Federal Tax-Exempt Bond Financing subsidized 4,388 units in 2021, the highest number of units in the SOMA data for a given year for this type of assistance. This likely reflects the fixed 4% credit. The Housing for Elderly Direct Loan Program estimates did not meet publication standards in 2021. In 2021, the South Region completed the most multifamily units (177,500) and the most subsidized multifamily units (14,950). Despite this, the South Region had the second lowest share of subsidized units of the four regions with 8.4% of completed units being subsidized. The West region had the highest share subsidized units with 18.2% of the 80,150 total units completed being subsidized. The share of subsidized units in the Northeast fell 11.9 percentage points from 18.9% to 7.0% between 2020 and 2021, dropping from the highest share in 2020 to the lowest in 2021. The Midwest had the second highest share of subsidized units in 2021 at 11.8%. Related ‹ Multifamily Missing Middle Flat at Start of 2023Tags: Absorption Rate, LIHTC, multifamily, SOMA

Apartment Absorptions Slightly Weaker in Fourth Quarter of 20222023-05-25T08:22:02-05:00

Multifamily Missing Middle Flat at Start of 2023

2023-05-24T08:20:35-05:00

By Robert Dietz on May 24, 2023 • The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties. The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has disappointed since the Great Recession. For the first quarter of 2023, there were just 4,000 2- to 4-unit housing unit construction starts. This is flat from a year prior. As a share of all multifamily production, 2- to 4-unit development was only 4% of the total for the fourth quarter. In contrast, from 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction. Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. Related ‹ Lack of Resales Provides Boost to New Home Sales in AprilTags: economics, home building, housing, missing middle, multifamily

Multifamily Missing Middle Flat at Start of 20232023-05-24T08:20:35-05:00

Multifamily Built-for-Rent Share Remains Elevated

2023-05-23T08:16:29-05:00

By Robert Dietz on May 23, 2023 • According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts remained elevated during the first quarter of 2023. For the first quarter, 127,000 multifamily residences started construction. Of this total, 123,000 were built-for-rental use. The market share of rental units of multifamily construction starts stood at an elevated 96% for the first quarter as the already small condo market remained held back due to higher interest rates. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period. For the first quarter, there were just 4,000 multifamily condo construction starts. This is less than half the total from a year ago. An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to first quarter 2023 data, the average square footage of multifamily construction starts ticked up to 1,065. The median increased to 1,018 square feet. Related ‹ New Single-Family Home Size Trending LowerTags: economics, home building, housing, mfbfr, multifamily, multifamily size

Multifamily Built-for-Rent Share Remains Elevated2023-05-23T08:16:29-05:00

Year-over-Year Decline for Single-Family Permits in March 2023

2023-05-15T09:36:07-05:00

By Danushka Nanayakkara-Skillington on May 15, 2023 • Over the first three months of 2023, the total number of single-family permits issued year-to-date (YTD) nationwide reached 191,695. On a year-over-year (YoY) basis, this is 31.1% below the March 2022 level of 278,189. Year-to-date ending in March, single-family permits declined in all four regions. The Northeast posted a decline of 20.5%, while the West region reported the steepest decline of 40.9%. The Midwest declined by 30.2% and the South declined by 28.4% in single-family permits during this time. The South posted an increase of 17.0% in multifamily permits and while the other three regions posted declines. Multifamily permits in the West were down 7.4%, Northeast down 28.4%, and down in the Midwest by 14.7%. Between March 2022 YTD and March 2023 YTD, all the states and the District of Columbia reported declines in single-family permits ranging from 0.8% in New Jersey to 67.8% in Montana. The ten states issuing the highest number of single-family permits combined accounted for 65.7% of the total single-family permits issued. Texas, the state with the highest number of single-family permits declined 36.6% in the past 12 months while the next two highest states, Florida and North Carolina declined by 26.1% and 19.3% respectively. Year-to-date, ending in March, the total number of multifamily permits issued nationwide reached 152,417. This is 0.8% below the March 2022 level of 153,720. Between March 2022 YTD and March 2023 YTD, 25 states and the District of Columbia recorded growth, while 25 states recorded a decline in multifamily permits. North Dakota led the way with a sharp rise in multifamily permits from 25 to 429 while Hawaii had the largest decline of 78.0% from 626 to 138. The ten states issuing the highest number of multifamily permits combined accounted for 66.0% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Top 10 Largest SF Markets Mar-23 (# of units YTD, NSA) YTD % Change(compared to Mar-22) Houston-The Woodlands-Sugar Land, TX                                         11,036 -27% Dallas-Fort Worth-Arlington, TX                                           7,711 -41% Atlanta-Sandy Springs-Roswell, GA                                           5,315 -31% Phoenix-Mesa-Scottsdale, AZ                                           4,687 -53% Charlotte-Concord-Gastonia, NC-SC                                           4,533 -20% Orlando-Kissimmee-Sanford, FL                                           4,000 -19% Austin-Round Rock, TX                                           3,428 -47% Tampa-St. Petersburg-Clearwater, FL                                           3,182 -15% Nashville-Davidson–Murfreesboro–Franklin, TN                                           3,177 -34% Raleigh, NC                                           3,074 -23% For multifamily permits, below are the top ten local areas that issued the highest number of permits. Top 10 Largest MF Markets Mar-23 (# of units YTD, NSA) YTD % Change(compared to Mar-22) New York-Newark-Jersey City, NY-NJ-PA                                           8,478 -38% Dallas-Fort Worth-Arlington, TX                                           6,654 -10% Houston-The Woodlands-Sugar Land, TX                                           6,235 22% Miami-Fort Lauderdale-West Palm Beach, FL                                           5,971 171% Phoenix-Mesa-Scottsdale, AZ                                           5,824 50% Atlanta-Sandy Springs-Roswell, GA                                           4,930 30% Austin-Round Rock, TX                                           4,473 -18% Los Angeles-Long Beach-Anaheim, CA                                           3,792 1% Seattle-Tacoma-Bellevue, WA                                           3,258 -37% Jacksonville, FL                                           3,173 8% Related ‹ Lending Standards Tighten for Residential and Commercial Real Estate Loans in Q1 2023Tags: home building, multifamily, single-family, state and local markets, state permits

Year-over-Year Decline for Single-Family Permits in March 20232023-05-15T09:36:07-05:00

Steep Year-over-Year Decline for Single-Family Permits in February 2023

2023-04-14T09:18:26-05:00

By Danushka Nanayakkara-Skillington on April 14, 2023 • Over the first two months of 2023, the total number of single-family permits issued year-to-date (YTD) nationwide reached 112,131. On a year-over-year (YoY) basis, this is 34.3% below the February 2022 level of 170,716. Year-to-date ending in February, single-family permits declined in all four regions. The Northeast posted a decline of 23.6%, while the West region reported the steepest decline of 44.7%. The Midwest declined by 33.3% and the South declined by 31.5% in single-family permits during this time. The South posted an increase of 31.8% in multifamily permits and the West increased by a small margin. Multifamily permits in the Northeast were down 32.6% and down in the Midwest 14.8%. Between February 2022 YTD and February 2023 YTD, all the states and the District of Columbia reported declines in single-family permits ranging from 3.8% in New Mexico to 72.8% in Montana. The ten states issuing the highest number of single-family permits combined accounted for 66.3% of the total single-family permits issued. Texas, the state with the highest number of single-family permits declined 40.2% in the last 12 months while the next two highest states, Florida and North Carolina declined by 31.2% and 22.3% respectively. Year-to-date, ending in February, the total number of multifamily permits issued nationwide reached 100,633. This is 8.4% above the February 2022 level of 92,818. Between February 2022 YTD and February 2023 YTD, 24 states and the District of Columbia recorded growth, while 26 states recorded a decline in multifamily permits. North Dakota led the way with a sharp rise in multifamily permits from two to 316 while Maine had the largest decline of 89.3% from 748 to 80. The ten states issuing the highest number of multifamily permits combined accounted for 67.4% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Top 10 Largest SF Markets Feb-23 (# of units YTD, NSA) YTD % Change(compared to Feb-22) Houston-The Woodlands-Sugar Land, TX                                           6,269 -34% Dallas-Fort Worth-Arlington, TX                                           4,867 -38% Atlanta-Sandy Springs-Roswell, GA                                           2,945 -39% Charlotte-Concord-Gastonia, NC-SC                                           2,745 -23% Phoenix-Mesa-Scottsdale, AZ                                           2,455 -60% Orlando-Kissimmee-Sanford, FL                                           2,293 -24% Tampa-St. Petersburg-Clearwater, FL                                           1,926 -26% Austin-Round Rock, TX                                           1,908 -52% Nashville-Davidson–Murfreesboro–Franklin, TN                                           1,845 -34% New York-Newark-Jersey City, NY-NJ-PA                                           1,808 -12% For multifamily permits, below are the top ten local areas that issued the highest number of permits. Top 10 Largest MF Markets Feb-23 (# of units YTD, NSA) YTD % Change(compared to Feb-22) Dallas-Fort Worth-Arlington, TX                                           5,364 10% Houston-The Woodlands-Sugar Land, TX                                           4,910 57% Atlanta-Sandy Springs-Roswell, GA                                           4,162 83% New York-Newark-Jersey City, NY-NJ-PA                                           4,047 -38% Miami-Fort Lauderdale-West Palm Beach, FL                                           3,762 113% Los Angeles-Long Beach-Anaheim, CA                                           2,793 0% Denver-Aurora-Lakewood, CO                                           2,749 35% Phoenix-Mesa-Scottsdale, AZ                                           2,698 18% Austin-Round Rock, TX                                           2,565 -14% Seattle-Tacoma-Bellevue, WA                                           2,404 -21% Related ‹ Building Materials Prices Climb as Concrete, Transformer Shortages PersistTags: home building, multifamily, single-family, state and local markets, state permits

Steep Year-over-Year Decline for Single-Family Permits in February 20232023-04-14T09:18:26-05:00

Single-Family Starts Remain Lackluster but Will Rebound Later This Year

2023-03-16T09:18:45-05:00

Single-family production remained at an anemic pace in February as builders continue to wrestle with elevated mortgage rates, high construction costs and tightening credit conditions that threaten to be exacerbated by recent turmoil in the banking system. Led by gains in apartment construction, overall housing starts in February increased 9.8% to a seasonally adjusted annual rate of 1.45 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The February reading of 1.45 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 1.1% to an 830,000 seasonally adjusted annual rate.  However, this remains 31.6% lower than a year ago. The multifamily sector, which includes apartment buildings and condos, increased 24% to an annualized 620,000 pace. Despite persistent supply-side challenges, rising builder confidence is signaling a turning point for home building later in 2023. A significant amount of housing demand exists on the sidelines and resale inventory is limited. Starts were up in February given a limited pullback for interest rates. We expect volatility in the months ahead as ongoing challenges related to construction material costs and availability continue to act as headwinds on the housing sector. However, interest rates are expected to stabilize and move lower in the coming months, and this should lead to a sustained rebound for single-family starts in the latter part of 2023. On a regional basis compared to the previous month, combined single-family and multifamily starts were 16.5% lower in the Northeast, 70.3% higher in the Midwest, 2.2% higher in the South and 16.8% higher in the West. Overall permits increased 13.8% to a 1.52 million unit annualized rate in February. Single-family permits increased 7.6% to a 777,000 unit rate. Multifamily permits increased 21.1% to an annualized 747,000 pace. Looking at regional permit data compared to the previous month, permits were 2.8% lower in the Northeast, 9.6% higher in the Midwest, 10.9% higher in the South and 30.0% higher in the West. The number of single-family units under construction is 734,000 homes. This is down 11.4% from May 2022, the cycle peak. The number of apartments under construction is 957,000. This is the highest total since Nov 1973. Given the declining pace for single-family starts in 2022, more homes are being completed than starting construction. In February, 58,600 single-family homes started construction. However, 77,100 completed construction. This difference is responsible for the ongoing decline in the number of single-family units under construction, as displayed in the chart above. Related ‹ Concrete Products Lead Building Materials Prices HigherTags: home building, housing, housing starts, multifamily, single-family, starts

Single-Family Starts Remain Lackluster but Will Rebound Later This Year2023-03-16T09:18:45-05:00

Permits Decline At The Start of 2023

2023-03-14T09:27:13-05:00

By Danushka Nanayakkara-Skillington on March 14, 2023 • Over the first month of 2023, the total number of single-family permits issued year-to-date (YTD) nationwide reached 53,062. On a year-over-year (YoY) basis, this is 36.4% below the January 2022 level of 83,404. Year-to-date ending in January, single-family permits declined in all four regions. The Northeast posted a decline of 20.3%, while the West region reported the steepest decline of 46.9%. The Midwest declined by 39.1% and the South declined by 33.5% in single-family permits during this time. The South posted an increase of 16.4% in multifamily permits while the other three regions posted declines. Multifamily permits were down 33.1% in the Northeast, down 24.2% in the Midwest, and down 11.1% in the West. Between January 2022 YTD and January 2023 YTD, the District of Columbia, North Dakota, and New Mexico saw growth in single-family permits issued. The District of Columbia recorded the highest growth rate during this time at 20.0% going from 10 permits to 12. Forty-eight states reported a decline in single-family permits during this time ranging from 2.9% decline in New Jersey to 60.7% decline in Arizona. The ten states issuing the highest number of single-family permits combined accounted for 65.6% of the total single-family permits issued. Year-to-date, ending in January, the total number of multifamily permits issued nationwide reached 47,936. This is 2.0% below the January 2022 level of 48,912. Between January 2022 YTD and January 2023 YTD, 23 states and the District of Columbia recorded growth, while 26 states recorded a decline in multifamily permits. Rhode Island reported no change. The District of Columbia led the way with a sharp rise in multifamily permits from four to 788 while Maine had the largest decline of 83.0% from 147 to 25. The ten states issuing the highest number of multifamily permits combined accounted for 69.1% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Top 10 Largest SF Markets January 2023 (# of units YTD, NSA) YTD % Change(compared to Dec 2021) Houston-The Woodlands-Sugar Land, TX                                                            2,692 -40% Dallas-Fort Worth-Arlington, TX                                                            2,244 -44% Atlanta-Sandy Springs-Roswell, GA                                                            1,348 -41% Charlotte-Concord-Gastonia, NC-SC                                                            1,324 -19% Phoenix-Mesa-Scottsdale, AZ                                                            1,102 -63% Orlando-Kissimmee-Sanford, FL                                                            1,077 -32% Tampa-St. Petersburg-Clearwater, FL                                                              954 -35% New York-Newark-Jersey City, NY-NJ-PA                                                               945 -4% Nashville-Davidson–Murfreesboro–Franklin, TN                                                               900 -34% Austin-Round Rock, TX                                                               892 -59% For multifamily permits, below are the top ten local areas that issued the highest number of permits. Top 10 Largest MF Markets January 2023 (# of units YTD, NSA) YTD % Change(compared to Dec 2021) Houston-The Woodlands-Sugar Land, TX                                                            3,574 147% Atlanta-Sandy Springs-Roswell, GA                                                            2,359 318% Dallas-Fort Worth-Arlington, TX                                                            2,336 -18% New York-Newark-Jersey City, NY-NJ-PA                                                            1,638 -55% Washington-Arlington-Alexandria, DC-VA-MD-WV                                                            1,430 2% Miami-Fort Lauderdale-West Palm Beach, FL                                                            1,384 21% Denver-Aurora-Lakewood, CO                                                           1,367 162% Raleigh, NC                                                            1,223 112% Tampa-St. Petersburg-Clearwater, FL                                                            1,156 1462% San Antonio-New Braunfels, TX                                                               983 -38% Related ‹ Employment Situation in January: State-Level AnalysisTags: home building, multifamily, single-family, state and local markets, state permits

Permits Decline At The Start of 20232023-03-14T09:27:13-05:00

Apartment Absorption Rate Falls but Remains above 60%

2023-02-27T12:32:10-06:00

By Jesse Wade on February 27, 2023 • Data from the Census Bureau’s latest Survey of Market Absorptions of New Multifamily Units (SOMA) indicates that the multifamily market continues to have high demand with apartment completions reaching their highest level since the third quarter of 2021. The absorption rate of new condominiums reached 82.0%, the best rate since the third quarter of 2013. With low single-family housing supply and increased unaffordability in the for-sale market, many would-be homebuyers have turned to or remained in the multifamily market. The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) fell by 11 percentage points to 62.0% in the third quarter of 2022. The number of completions was up from the second quarter of 2022, from 76,970 to 85,190, while completions were down 1.4% from one year ago. The median asking rent for apartments increased from $1,722 in the third quarter of 2021 to $1,805 in the third quarter of 2022, a 4.8% increase over the year. This is the seventh consecutive quarter with a year-over-year increase in the median asking rent price. The condominium absorption rate (the share purchased in the first three months following completion) increased from the second quarter of 2022 by 9 percentage points to 82.0% while condominium completions increased by 66.2% on a year-over-year basis from 2,775 in the third quarter of 2021 to 4,611 in the third quarter of 2022. The median asking sales price of condominiums rose to $579,900 in the third quarter of 2022, 4.4% higher than the median asking sales price of $555,600 in the third quarter of 2021. Related ‹ New Home Sales Up in January but Higher Rates Signal Further WeaknessTags: Absorption Rate, multifamily, SOMA

Apartment Absorption Rate Falls but Remains above 60%2023-02-27T12:32:10-06:00

Missing Middle Housing Production Lags

2023-02-24T07:30:23-06:00

By Robert Dietz on February 23, 2023 • The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties. While townhouse construction has trended higher in recent quarters, the multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has disappointed. For 2021, there were only 12,000 starts of such residences. This is flat from from 2020, during a period of time when most construction segments expanded. For 2022, the total increased but to only 16,000. Nonetheless, this marks the best year for this type of multifamily construction since the Great Recession. For the fourth quarter of 2022, there were just 3,000 2- to 4-unit housing unit construction starts. This is flat from a year prior. As a share of all multifamily production, 2- to 4-unit development was only 2.2% of the total for the fourth quarter. In contrast, from 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction. Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. Related ‹ Multifamily Built-for-Rent Share RisesMultifamily Developer Confidence Remains in Negative Territory in Fourth Quarter ›Tags: economics, home building, housing, missing middle, multifamily

Missing Middle Housing Production Lags2023-02-24T07:30:23-06:00
Close Sliding Bar Area

About My Work

Phasellus non ante ac dui sagittis volutpat. Curabitur a quam nisl. Nam est elit, congue et quam id, laoreet consequat erat. Aenean porta placerat efficitur. Vestibulum et dictum massa, ac finibus turpis.

Recent Works

Recent Posts