Single-Family Housing Starts Hit 12-Month High in February

2025-03-18T10:19:07-05:00

Limited existing inventory helped single-family starts to post a solid gain in February, but builders are still grappling with elevated construction costs stemming from tariff issues and persistent shortages related to buildable lots and labor. Overall housing starts increased 11.2% in February to a seasonally adjusted annual rate of 1.50 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 1.50 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 11.4% to a 1.11 million seasonally adjusted annual rate, the highest pace since February 2024. The multifamily sector, which includes apartment buildings and condos, increased 10.7% to an annualized 393,000 pace. While solid demand and a lack of existing inventory provided a boost to single-family production in February, our latest builder survey shows that builders remain concerned about challenging housing affordability conditions, most notably elevated financing and construction costs as well as tariffs on key building materials. On a regional and year-to-date basis, combined single-family and multifamily starts were 4.7% lower in the Northeast, 21.5% lower in the Midwest, 8.3% lower in the South and 20.2% higher in the West. Overall permits decreased 1.2% to a 1.46-million-unit annualized rate in February and were down 6.8% compared to February 2024. Single-family permits decreased 0.2% to a 992,000-unit rate and were down 3.4% compared to the previous year. Multifamily permits decreased 3.1% to a 464,000 pace. Looking at regional permit data on a year-to-date basis, permits were 30.1% lower in the Northeast, 2.3% higher in the Midwest, 2.1% lower in the South and 12.5% lower in the West. The number of single-family homes under construction in February was down 6.7% from a year ago, at 640,000 homes. In February, the count of apartments under construction increased 0.3% to an annualized 772,000 pace. It marks the first gain after 18 months of consecutive declines but was still down 20% from a year ago. There were 526,000 multifamily completions in February, down 15% from the previous year. For each apartment starting construction, there are 1.5 apartments completing the construction process. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Single-Family Housing Starts Hit 12-Month High in February2025-03-18T10:19:07-05:00

Multifamily Completions Rise Again Pushing Absorption Rates Lower

2025-02-28T08:18:38-06:00

The percentage of new apartment units that were absorbed within three months after completion continued to trend downwards, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed reached a new peak in the third quarter of 2024, its third straight quarter recording a record high number of completions. Apartments The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 50% which is coupled with an uptick in completions, as the SOMA estimates show a new high of completions at 143,600 units in the third quarter of 2024. This outpaces the level of completions a year ago, which stood at 84,830, by almost 70%. The level of multifamily units reaching completion has onlycontinued to grow since the number of units under construction peaked at over one million in 2023. Along with the three-month absorption rate and completions, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. Solely focusing on the 12-month absorption rate, it fell to its lowest level since the start of the pandemic, registering a rate of just 90%. This means that 10% of the 90,630 apartments completed in the fourth quarter of 2023 remain unoccupied. As completions have risen over the past year, the supply of available apartments has increased. Additionally, regional SOMA data points to the Northeast as a possible explanation for a lower 12-month absorption rate, as nearly 23% of the fourth quarter completions in 2023 remain unoccupied. This is well above any other region, with the Midwest at 7%, the South at 9% and the West at 5%. Condominiums and Cooperative Units The absorption rate for new condominiums and cooperative units fell to 63% for the quarter, down 1 percentage point from the previous quarter. Total completions of new condominiums and cooperative units, according to the SOMA, fell over the quarter from 4,452 to 4,008. Quarterly completions of these units peaked in the second quarter of 2018, at 7,996 completions but have steadily fallen since. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Multifamily Completions Rise Again Pushing Absorption Rates Lower2025-02-28T08:18:38-06:00

Year-over-Year Gain for Multifamily Missing Middle

2025-02-26T08:26:42-06:00

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 generally disappointed since the Great Recession. However, there was a noticeable uptick for this type of housing construction in recent data. For the fourth quarter of 2024, there were 5,000 2- to 4-unit housing unit construction starts. This is up 25% from the fourth quarter of 2023. As a share of all multifamily production, 2- to 4-unit development was just above 5% of total multifamily development for the fourth quarter. However this is still lower than recent historic trends. 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. But recent data offer hope for additional housing supply for these kind of structures. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Year-over-Year Gain for Multifamily Missing Middle2025-02-26T08:26:42-06:00

Multifamily Unit Size Increases

2025-02-25T08:19:02-06:00

According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts declined during the fourth quarter of 2024. For the quarter, 91,000 multifamily residences started construction. Of this total, 86,000 were built-for-rent. This was almost 12% lower than the fourth quarter of 2023. The market share of rental units of multifamily construction starts ticked higher to 95% for the fourth quarter. A historical low market share of 47% for bult-for-rent multifamily construction 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 fourth quarter, there were 5,000 multifamily condo unit construction starts, up from 4,000 a year ago. An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. However, according to the fourth quarter 2024 data, the average square footage of multifamily construction starts moved higher to 1,129 square feet. The median edged up to 1,039 square feet. These are notable moves higher off of multidecade lows. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Multifamily Unit Size Increases2025-02-25T08:19:02-06:00

Housing Starts Retreat at the Start of 2025

2025-02-19T09:22:55-06:00

Constrained housing affordability conditions due to ongoing, elevated interest rates led to a reduction in single-family production to start the new year. Overall housing starts decreased 9.8% in January to a seasonally adjusted annual rate of 1.37 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The January reading of 1.37 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 decreased 8.4% to a 993,000 seasonally adjusted annual rate; the January pace was 1.8% lower than a year ago. The multifamily sector, which includes apartment buildings and condos, decreased 13.5% to an annualized 373,000 pace. As mirrored in the NAHB/Wells Fargo HMI, high construction costs, elevated mortgage rates and challenging housing affordability conditions are causing builders to approach the market with caution. There are competing upside and downside risks, including discussed tariffs and regulatory reform. Given persistent affordability concerns, reducing inefficient regulatory costs would offer the best policy path to improve attainable housing supply and bring down shelter inflation. On a regional basis compared to the previous month, combined single-family and multifamily starts are 27.6% lower in the Northeast, 10.4% lower in the Midwest, 23.3% lower in the South and 42.3% higher in the West. Overall permits increased 0.1% to a 1.48 million unit annualized rate in January. Single-family permits were at a 996,000 annual unit rate, remaining unchanged compared to the previous month. Multifamily permits increased 0.2% to an annualized 487,000 pace. Looking at regional permit data compared to the previous month, permits are 6.1% lower in the Northeast, 1.8% higher in the Midwest, 0.1% lower in the South and 2.3% higher in the West. The number of single-family homes under construction in January is down 6.3% from a year ago, to 641,000 units. The number of multifamily units under construction is down 22.1% from a year ago, to 768,000 units. There were 669,000 multifamily completions in January, up 11% from January 2024. For each apartment starting construction, there are 1.8 apartments completing the construction process. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Housing Starts Retreat at the Start of 20252025-02-19T09:22:55-06:00

Single-Family Permits Up in November 2024  

2025-01-15T09:23:24-06:00

Over the first eleven months of 2024, the total number of single-family permits issued year-to-date (YTD) nationwide reached 912,910. On a year-over-year (YoY) basis, this is an increase of 8.2% over the November 2023 level of 843,654. Year-to-date ending in November, single-family permits were up in all four regions. The range of permit increases spanned 11.5% in the Midwest to 6.3% in the South. The West was up by 11.4% and the Northeast was up by 9.4% in single-family permits during this time. For multifamily permits, three out of the four regions posted declines. The Northeast, driven by New York City’s MSA, was the only region to post an increase and was up by 32.6%. Meanwhile, the West posted a decline of 29.7%, the South declined by 19.6%, and the Midwest declined by 3.1%. Between November 2024 YTD and November 2023 YTD, 44 states posted an increase in single-family permits. The range of increases spanned 31.4% in Montana to 2.6% in Missouri. The remining six states and the District of Columbia reported declines in single-family permits. The ten states issuing the highest number of single-family permits combined accounted for 62.9% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 146,843 permits over the first eleven months of 2024, which is an increase of 8.8% compared to the same period last year. The second highest state, Florida, was down by 0.3%, while the third highest, North Carolina, posted an increase of 7.0%. Year-to-date ending in November, the total number of multifamily permits issued nationwide reached 445,357. This is 14.5% below the November 2023 level of 520,919. Between November 2024 YTD and November 2023 YTD, 21 states recorded growth in multifamily permits, while 29 states and the District of Columbia recorded a decline. New York (+113.8%) led the way with a sharp rise in multifamily permits from 14,544 to 31,098, while Idaho had the biggest decline of 54.3% from 5,469 to 2,497. The ten states issuing the highest number of multifamily permits combined accounted for 62.3% of the multifamily permits issued. Over the first eleven months of 2024, Texas, the state with the highest number of multifamily permits issued, experienced a decline of 21.3%. Following closely, the second-highest state in multifamily permits, Florida, saw a decline of 25.0%. California, the third largest multifamily issuing state, decreased by 32.0%. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. For multifamily permits, below are the top ten local areas that issued the highest number of permits. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Single-Family Permits Up in November 2024  2025-01-15T09:23:24-06:00

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