Annualized Permits and Starts Increase in February

Both single-family and multifamily starts jumped in February as better weather conditions and tight inventories spurred residential development.

The seasonally adjusted annual rate (SAAR) for single-family starts surged by 11.6% to 1.129 million units from January and are up 35.2% from last February, according to the lastest data from the U.S. Census Bureau. Multifamily starts increased 8.6% to 377,000 units from last month but are 35.9% below the year ago rate.

Meanwhile, forward looking permitting for single-family homes inched up 1% to 1.031 million units, an increase of 29.5% from last year. Multifamily permitting increased 2.4% to 429,000 units but was significantly lower than the annual rate from last February (-32.8%).

Completions of multifamily units were up 20.8% from January to 644,000 units and increased 18.8% from last February. The number of multifamily units under construction slipped 1% from January to 966,000 units and was down 6.8% from last year. Additionally, the number of multifamily units authorized but not started was up 3.3% at 125,000 units in February but down 23.8% from one year ago.

Single-family completions were up 20.2% for the month and 4.2% for the year to 1.072 million units. The number of single-family units under construction was virtually unchanged at 683,000 units but that was 6.1% less than one year ago. Single-family units authorized but not started inched down 1.4% from January but climbed 6% from last February to 141,000 units.

Together with the small two-to-four-unit figures, total residential permitting ticked up 1.9% from last month and 2.4% for the year to 1.518 million units. February’s large increases in annual multifamily and single-family starts brought the SAAR of total residential starts up 10.7% from last month to 1.521 million units and up 59% from last year.

Compared to one year ago, the annual rate for multifamily permitting increased sharply in the small Northeast Census region (up 155% to 128,000 units), while the West decreased by 57.9% to 78,000 units and the South saw a similar decrease in permitting (down 50% to 165,000 units). The Midwest region experienced a more moderate decrease of 20.7% to 60,000 units permitted. Compared to the previous month, permitting was also up in the Northeast and down in the remaining regions.

Like permitting, multifamily starts increased only in the small Northeast region (up 1.5% to 33,000 units) and were down significantly in the Midwest (-57.4% to 41,000 units), West (-42.2% to 106,000 units) and South (-28.6% to 196,000 units) regions. Compared to January’s SAAR, starts were actually down in the Northeast region and up in the three remaining Census regions.

Metro-Level Multifamily Permitting

All the top 10 markets from January’s list returned in February with only two changing places and the rest remaining in order.

New York remained the top multifamily permitting market in the 12-months-ending in February with 27,856 units permitted, down almost 20% from last year but up almost the same amount from January. Austin returned at #2 with 20,207 units permitted, down 7.5% for the month and 10.8% for the year.

Phoenix remained in the #3 spot, permitting a total of 18,942 units for the year, almost 1,300 units fewer than last month’s total but only 661 units less than last February. Dallas continues to slow annual multifamily permitting, but remained in the #4 spot, permitting 15,047 units for the year, about 1,400 units less than in January and 9,434 units less than last year.

Houston is also slowing permitting activity sharply, dropping 15,294 units from their 12-month total last year to 13,705 units this year. Los Angeles rounded out the first six returning in order with 12,916 units permitted, down modestly from last month and 3,514 units less than a year ago.

Washington, DC changed places with Atlanta at the #7 and #8 spots. DC permitted 12,006 units for the year, more than 8,200 less than last February but about the same as last month. Atlanta declined by 1,029 units from their January total to 11,613 units permitted, almost half the level of last year. Miami and Raleigh/Durham returned to the #9 and #10 spots in February with close to 10,500 units permitted each and both down close to 3,500 units from last year.

Only one of the top 10 multifamily permitting markets increased their annual total from the year before (Miami), while the remaining nine had some pretty significant decreases. Houston had the worst decrease in annual multifamily permitting of the top 10 (-15,294 units), followed by Atlanta (-10,531 units), Dallas (-9,434 units) and Washington, DC (-8,210 units). New York, Raleigh/Durham and Los Angeles had significant declines in multifamily permitting as well.

Other major non-top 10 markets with significant declines in permitting include Seattle (-7,099 units), San Antonio (-6,652 units), Minneapolis/St. Paul (-6,200 units), Tampa (-5,466 units), Portland, OR (-3,659 units), Denver (-3,463 units) and Orlando (-3,345 units).

Major markets with significant year-over-year increases in annual multifamily permitting in the year-ending February were Nashville (+4,842 units), Greensboro/Winston-Salem (+3,331 units), San Diego (+1,960 units), Columbus, OH (+1,662 units), Riverside (+1,338 units), Charlotte (+1,283 units) and Pittsburgh (+1,246 units).

The annual total of multifamily permits issued in the top 10 metros – 153,280 – was about 28% less than the 213,029 issued in the previous 12 months and down about 1.9% from last month. The total number of permits issued in the top 10 metros was almost equal to the number of permits issued for the #11 through #33 ranked metros.

Below the metro level, nine of last month’s top 10 permit-issuing places returned to this month’s list with only four remaining in the same place and the rest changing places. The list of top individual permitting places (cities, towns, boroughs and unincorporated counties) generally include the principal city of some of the most active metro areas.

In February, the city of Austin remained in the #1 position with 11,118 units permitted, about 1,300 units less than in January. The city of Los Angeles moved up to the #2 spot in February with 9,369 units permitted, 94 more than last month. The city of Phoenix moved down one to #3 with 8,697 units permitted, 1,483 units less than last month.

The city-county of Nashville-Davidson and Mecklenburg County (Charlotte) remained at the #4 and #5 spots with Nashville-Davidson permitting 7,237 units and Mecklenburg County permitting 6,371 units for the year. The city of Houston also remained in place at #6 with a total of 6,342 units permitted, 593 less than in January.

The borough of Brooklyn replaced the city of Miami on this month’s list at #7 with 6,163 units permitted for the year, up 1,861 units from January’s total. The city of Atlanta moved up a spot to #8 with 5,627 units permitted but that was virtually unchanged from last month. The city of Columbus also moved up a spot to land at #9 with 5,588 units permitted, up 752 units for the month and unincorporated Travis County (Austin) dropped two spots to #10 with 5,447 units permitted.

The next 10 permit-issuing places by total units permitted includes several Texas markets that had been top 10 leaders in the past such as the cities of Dallas, San Antonio and Fort Worth and unincorporated Harris County (Houston). The borough of Manhattan returned to the top 20 after a long absence.