Multifamily Permits Surge in November as Starts Plunge

The annualized rate for multifamily permits issued jumped 22.1% in November from October’s annual rate to 481,000 units, according to the latest report from the U.S. Census Bureau and the Department of Housing and Urban Development. Compared to last November, multifamily permitting was up 4.8%.

However, the latest reported annual rate for multifamily permits is a seasonally adjusted monthly rate that is then annualized. This allows easy month to month comparisons, but it is not the sum of monthly totals from permit issuing places that is not seasonally adjusted.

This chart shows both the annualized seasonally adjusted total and the 12-month moving not seasonally adjusted annual total for multifamily permits and the inherent volatility of the seasonally adjusted figures is very apparent.

Looking at the moving 12-month not seasonally adjusted figures, the percent change in November from October was almost negligible at 431,800 units, and compared to one year ago, multifamily permitting is down almost 22%. This comports more closely with “on the ground” observations.

Likewise, the seasonally adjusted annual rate (SAAR) for multifamily starts exhibits the same volatility with a decrease of 24.1% from October’s rate to 264,000 units, down 28.8% for the year. However, not seasonally adjusted multifamily starts were down almost 31% from October’s 12-month total to 336,100 units, down 26.5% from last November.

On the single-family side, November’s SAAR of 972,000 units was almost unchanged from October and down 2.7% from last year. Annualized single-family starts were up 6.4% to 1.011 million units, but down 10.2% for the year.

The SAAR for completions was up from last November by 7% for single-family homes (to 1.038 million units) and 13.6% for multifamily (to 544,000 units). Reflecting the apparent slowing in residential construction, there were 20.9% fewer multifamily units under construction than one year ago (780,000 units) and single-family units under construction were down 6.3% at 637,000 units.

Compared to one year ago, the annual rate for multifamily permitting almost doubled in the small Northeast region (up 91.2% to 87,000 units), increased 23.6% in the Midwest (to 76,000 units), and was up 9% in the South (to 212,000 units). The West region saw a decrease in annualized multifamily permitting of 32.7% (to 106,000 units). Compared to the previous month, permitting was up in all four Census regions.

Annualized multifamily starts increased moderately in the Northeast region (up 21.9% to 66,000 units) and were down 44.2% in the South (to 103,000 units), 29.1% in the Midwest (to 23,000 units) and 27.8% in the West (to 74,000 units). Compared to October’s SAAR, starts were also down in the South, Midwest and West, and up in the Northeast.

Metro-Level Multifamily Permitting

New York consistently leads the nation for multifamily permitting and did it again in the 12-months-ending in November with about 34,000 units permitted. This was one of only two top 10 markets to increase their annual permitting from the year before. Austin and Phoenix remained in the next two spots, but both saw significant declines in their permit totals from the year before. Atlanta overtook Dallas by only 85 units to the #4 spot with both at close to 12,600 units permitted for the year.

Houston remained in the #6 spot with 11,520 units permitted, down more than 6,300 units from last November but about 900 units greater than October’s total. Washington, DC and Los Angeles remained fixed in their previous spots from October with more than 9,000 units permitted each, and together were down an average of 500 units from last month.

Fort Worth and Miami displaced last month’s #9 and #10 Tampa and Raleigh/Durham, with Fort Worth experiencing an increase of more than 3,500 units permitted than the year-ending November 2023.

In addition to New York and Fort Worth, other markets with significant year-over-year increases in annual multifamily permitting in the year-ending November were Omaha (+2,027 units), Ashville, NC (+2,011 units), Boston (+ 1,904 units), Milwaukee (+1,798 units) and Kansas City (+1,702 units).

Markets with significant declines in multifamily permitting outside of the top 10 markets include San Antonio (-4,980 units), Jacksonville (-4,935 units), Riverside (-4,823 units), Minneapolis/St. Paul (-4,768 units) and Nashville (-4,703 units).

Below the metro level, eight of last month’s top 10 permit-issuing places returned to this month’s list with only the first three remaining in the same place. 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.

The borough of Brooklyn and the cities of Austin and Los Angeles returned to the first three permitting spots in November, but unlike their metro areas, permitting increased in Austin and declined in Brooklyn and Los Angeles. The Bronx borough moved up five spots this month, increasing their annual permitting by more than 800 units from October.

The cities of Atlanta and Fort Worth were pushed down one spot each with little change in their annual permitting from last month’s totals. The city of Miami jumped from #11 to #7 in November with a 700 unit increase in multifamily permits to 5,644 units.

Unincorporated Travis County also leapt onto the top 10 list with an increase of 943 units from October as the Austin area continues to be an active hotspot for multifamily development. Charlotte’s Mecklenburg County and the city of Phoenix remained among the top 10 permitting places but are beginning to slow their permitting activity.

Texas still leads all states with six of the top 20 individual permitting places on November’s list, two in the Austin area and one for the city of Fort Worth. Four of New York’s five boroughs made the top 20 with two in the top 10, while the remaining five top 10 spots are geographically diverse.