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Single-Family Housing Continues Growth

Single-Family Housing Continues Growth

In this recent article from the National Association of Home Builders, Single-family starts continue their strong growth.

Single-Family Housing Continues Growth

(NAHB) Single-family starts showed continued growth in August but overall housing production fell 5.1 percent to a seasonally adjusted annual rate of 1.42 million units due to a double-digit percentage decline in multifamily production, according to a report from the U.S. Housing and Urban Development and Commerce Department. The pace of single-family starts in August was the highest production rate since February.

The August reading of 1.42 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 4.1 percent to a 1.02 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, decreased 22.7 percent to a 395,000 pace.

“Consistent with surging builder confidence, single-family starts rose in August to meet rising buyer traffic,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “Builders continue to face concerns in terms of rising lumber prices and supply chain shortages of other building materials.”

“Total housing starts were down in August on a decline for multifamily construction, with multifamily 5+ unit permits now down 8.3 percent on a year-to-date basis,” said NAHB Chief Economist Robert Dietz. “But low interest rates and solid demand are spurring single-family construction growth, which makes up the bulk of the housing market. Single-family permits continue to rise as well, and are now up almost 7 percent on a year-to-date basis.”

On a regional and year-to-date basis (January through August of 2020 compared to that same time frame a year ago), combined single-family and multifamily starts are 13.6 percent higher in the Midwest, 5.4 percent higher in the South, 3.8 percent higher in the West and 4.5 percent lower in the Northeast.

Overall permits decreased 0.9 percent to a 1.47 million unit annualized rate in August. Single-family permits increased 6.0 percent to a 1.04 million unit rate. Multifamily permits decreased 14.2 percent to a 434,000 pace.

Looking at regional permit data on a year-to-date basis, permits are 2.6 percent higher in the Midwest, 4.8 percent higher in the South, 8.2 percent lower in the Northeast and 1.3 percent lower in the West.

Multifamily Builders and Developers Remain Positive about the Apartment and Condo Market as Demand Continues

In this recent article from the National Association of Home Builders (NAHB), demand continues to boost confidence in the multi-family market.

Multifamily Builders and Developers Remain Positive about the Apartment and Condo Market as Demand Continues

(NAHB), 

Confidence in the multifamily housing market remained positive in the first quarter of 2018, according to the Multifamily Production Index (MPI) and the Multifamily Vacancy Index (MVI) released today by the National Association of Home Builders (NAHB). The MPI remained unchanged from last quarter, coming in at a reading of 53, while the MVI remained essentially unchanged at 42.

The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units—apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units—apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units edged down two points to 54, while the component measuring market rate rental units increased two points to 56 and the component measuring for-sale units remained even at 49.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained essentially unchanged with an increase of one point to 42. The MVI is a weighted average of current occupancy indexes for class A, B, and C multifamily units, and can vary from 0 to 100, where any number over 50 indicates more property managers report more vacant apartments. A reading of 42 is seen as a healthy number for the multifamily market.

“Multifamily builders and developers are reporting solid demand around the country, as shown in the vacancy rate for the first quarter,” said Steve Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of NAHB’s Multifamily Council. “We anticipate steady demand through the rest of the year as household formations continue to grow.”

“The stability of multifamily builder confidence is consistent with NAHB’s view that the market has reached a healthy, sustainable level of production,” said NAHB Chief Economist Robert Dietz. “The overall strong economy is supporting demand and balancing supply-side issues many builders are facing, including shortages of labor and buildable lots, and the recent surge in lumber prices.”

Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance.

For data tables on the MPI and MVI, visit www.nahb.org/mms.

For more information on the NAHB Multifamily program, please visit NAHB Multifamily: https://www.nahb.org/en/members/committees-and-councils/councils/multifamily-council/nahb-multifamily.aspx.

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