Category: Blog

Census releases multifamily housing construction data for October 2019



The Census Bureau released its monthly new residential construction report for October 2019. The report showed a continued surge in the number of building permits issued. Starts were also strong but completions lag for now.

Permits reach new highs

Other than for a weak June figure, the number of permits issued for buildings with 5 or more units have been strong recently. They were up by 6.1 percent from September’s revised reading to 505,000 units on a seasonally adjusted, annualized basis. This is a very high rate and has only been exceeded recently by August’s reading of 508,000 permits. Compared to the year-earlier level, permits for buildings with 5 or more units were also up, rising 27.5 percent.

In addition, 47,000 permits were issued in October for buildings with 2 to 4 units, a recent high.

Regional data for multifamily housing is only reported for structures with two or more units. “Structures with 5 or more units” is not broken out as a separate category. Since the regional data is highly volatile and is frequently revised, it is examined here based on three-month moving averages.

Nationally, the three-month moving average for permits issued for multifamily housing in October was up 4.1 percent from September and up 28.3 percent from the level of September 2018. This is shown in the first chart, below.

On a month over month basis, the Northeast and South saw rises in permits issued of 11.5 percent and 6.0 percent respectively. Permit issuance was down in the Midwest and West, but by less than one percent in each case.

Compared to year-earlier levels, the number of units permitted rose strongly in all regions except the Midwest where they were down less than 5 percent. The regions of the country representing most construction activity, the South and the West were up 26.0 percent and 29.8 percent respectively. The reading in the West is especially interesting in that the recent rent control laws passed in California and Oregon might have been expected to dampen interest in this region. This appears to have not yet happened.

Multifamily housing construction starts up

Multifamily housing construction starts have been on a roller-coaster of late with significant rises and falls in the numbers reported month by month. In October, the level of construction starts for buildings with 5 or more units was up by 6.8 percent from the revised figure for the month earlier. The 362,000 starts reported on a seasonally-adjusted, annualized basis, is almost exactly the average of the monthly reports for the last two years.

Compared to year-earlier levels, construction starts for buildings with 5 or more units were also up, rising 10.7 percent from the October 2018 level.

Multifamily housing construction starts (two or more units per building) were up 8.6 percent from their September levels for the country as-a-whole, based on three-month moving averages. The Midwest and the West each saw starts rise by more than 30 percent on the month while the Northeast and the South each saw starts fall by a little under 10 percent.

On a year-over-year basis, starts were up 9 percent for the country-as-a-whole. Starts surged in the Northeast by 57 percent compared to year-earlier levels. Starts were also up modestly in the South but were down slightly in the Midwest and West.

The following chart shows the starts by region for the last 25 months.

Completions bounce back

Nationally, completions of buildings with 5 or more units rose 27.3 percent in October from the month-earlier level, reaching 354,000 units on an annualized basis. This comparison was helped by the fact that the revised September level of completions was only 278,000 units on a seasonally-adjusted, annualized basis. Only June 2019 had fewer completions in the last two years. Compared to the year-earlier level, completions of building with 5 or more units in October were up 25.5 percent, although October 2018 was also a relatively week month for completions.

For the country as-a-whole, completions for multifamily housing (two or more units per building) were up slightly, rising 2 percent month-over-month, comparing three-month moving averages. Note that bad weather in late 2018 suppressed completions then and led to a surge in completions in early 2019, distorting the “natural” level of completions and making trends harder to spot. Still, completions have been running below the two-year average for the last 5 months. While this could indicate a softening in the market, it is at odds with the strength seen in permit issuance.

By region, the three-month moving averages of completions were up in the Northeast and the West but down in the Midwest and the South.

On a year-over-year basis, the three-month moving average of completions was up by 8 percent. By region, the story was again mixed with completions rising strongly in the West and the Northeast but falling modestly in the Midwest and the South.

Completions by region for the past 25 months are shown in the chart below.

All data quoted are based on seasonally adjusted results and are subject to revision.



Census releases multifamily housing construction data for October 2019


The Census Bureau released its monthly new residential construction report for October 2019. The report showed a continued surge in the number of building permits issued. Starts were also strong but completions lag for now.

Permits reach new highs

Other than for a weak June figure, the number of permits issued for buildings with 5 or more units have been strong recently. They were up by 6.1 percent from September’s revised reading to 505,000 units on a seasonally adjusted, annualized basis. This is a very high rate and has only been exceeded recently by August’s reading of 508,000 permits. Compared to the year-earlier level, permits for buildings with 5 or more units were also up, rising 27.5 percent.

In addition, 47,000 permits were issued in October for buildings with 2 to 4 units, a recent high.

Regional data for multifamily housing is only reported for structures with two or more units. “Structures with 5 or more units” is not broken out as a separate category. Since the regional data is highly volatile and is frequently revised, it is examined here based on three-month moving averages.

Nationally, the three-month moving average for permits issued for multifamily housing in October was up 4.1 percent from September and up 28.3 percent from the level of September 2018. This is shown in the first chart, below.

On a month over month basis, the Northeast and South saw rises in permits issued of 11.5 percent and 6.0 percent respectively. Permit issuance was down in the Midwest and West, but by less than one percent in each case.

Compared to year-earlier levels, the number of units permitted rose strongly in all regions except the Midwest where they were down less than 5 percent. The regions of the country representing most construction activity, the South and the West were up 26.0 percent and 29.8 percent respectively. The reading in the West is especially interesting in that the recent rent control laws passed in California and Oregon might have been expected to dampen interest in this region. This appears to have not yet happened.

Multifamily housing construction starts up

Multifamily housing construction starts have been on a roller-coaster of late with significant rises and falls in the numbers reported month by month. In October, the level of construction starts for buildings with 5 or more units was up by 6.8 percent from the revised figure for the month earlier. The 362,000 starts reported on a seasonally-adjusted, annualized basis, is almost exactly the average of the monthly reports for the last two years.

Compared to year-earlier levels, construction starts for buildings with 5 or more units were also up, rising 10.7 percent from the October 2018 level.

Multifamily housing construction starts (two or more units per building) were up 8.6 percent from their September levels for the country as-a-whole, based on three-month moving averages. The Midwest and the West each saw starts rise by more than 30 percent on the month while the Northeast and the South each saw starts fall by a little under 10 percent.

On a year-over-year basis, starts were up 9 percent for the country-as-a-whole. Starts surged in the Northeast by 57 percent compared to year-earlier levels. Starts were also up modestly in the South but were down slightly in the Midwest and West.

The following chart shows the starts by region for the last 25 months.

Completions bounce back

Nationally, completions of buildings with 5 or more units rose 27.3 percent in October from the month-earlier level, reaching 354,000 units on an annualized basis. This comparison was helped by the fact that the revised September level of completions was only 278,000 units on a seasonally-adjusted, annualized basis. Only June 2019 had fewer completions in the last two years. Compared to the year-earlier level, completions of building with 5 or more units in October were up 25.5 percent, although October 2018 was also a relatively week month for completions.

For the country as-a-whole, completions for multifamily housing (two or more units per building) were up slightly, rising 2 percent month-over-month, comparing three-month moving averages. Note that bad weather in late 2018 suppressed completions then and led to a surge in completions in early 2019, distorting the “natural” level of completions and making trends harder to spot. Still, completions have been running below the two-year average for the last 5 months. While this could indicate a softening in the market, it is at odds with the strength seen in permit issuance.

By region, the three-month moving averages of completions were up in the Northeast and the West but down in the Midwest and the South.

On a year-over-year basis, the three-month moving average of completions was up by 8 percent. By region, the story was again mixed with completions rising strongly in the West and the Northeast but falling modestly in the Midwest and the South.

Completions by region for the past 25 months are shown in the chart below.

All data quoted are based on seasonally adjusted results and are subject to revision.


Census releases multifamily housing construction data for October 2019

The Census Bureau released its monthly new residential construction report for October 2019. The report showed a continued surge in the number of building permits issued. Starts were also strong but completions lag for now.

Permits reach new highs

Other than for a weak June figure, the number of permits issued for buildings with 5 or more units have been strong recently. They were up by 6.1 percent from September’s revised reading to 505,000 units on a seasonally adjusted, annualized basis. This is a very high rate and has only been exceeded recently by August’s reading of 508,000 permits. Compared to the year-earlier level, permits for buildings with 5 or more units were also up, rising 27.5 percent.

In addition, 47,000 permits were issued in October for buildings with 2 to 4 units, a recent high.

Regional data for multifamily housing is only reported for structures with two or more units. “Structures with 5 or more units” is not broken out as a separate category. Since the regional data is highly volatile and is frequently revised, it is examined here based on three-month moving averages.

Nationally, the three-month moving average for permits issued for multifamily housing in October was up 4.1 percent from September and up 28.3 percent from the level of September 2018. This is shown in the first chart, below.

On a month over month basis, the Northeast and South saw rises in permits issued of 11.5 percent and 6.0 percent respectively. Permit issuance was down in the Midwest and West, but by less than one percent in each case.

Compared to year-earlier levels, the number of units permitted rose strongly in all regions except the Midwest where they were down less than 5 percent. The regions of the country representing most construction activity, the South and the West were up 26.0 percent and 29.8 percent respectively. The reading in the West is especially interesting in that the recent rent control laws passed in California and Oregon might have been expected to dampen interest in this region. This appears to have not yet happened.

Multifamily housing construction starts up

Multifamily housing construction starts have been on a roller-coaster of late with significant rises and falls in the numbers reported month by month. In October, the level of construction starts for buildings with 5 or more units was up by 6.8 percent from the revised figure for the month earlier. The 362,000 starts reported on a seasonally-adjusted, annualized basis, is almost exactly the average of the monthly reports for the last two years.

Compared to year-earlier levels, construction starts for buildings with 5 or more units were also up, rising 10.7 percent from the October 2018 level.

Multifamily housing construction starts (two or more units per building) were up 8.6 percent from their September levels for the country as-a-whole, based on three-month moving averages. The Midwest and the West each saw starts rise by more than 30 percent on the month while the Northeast and the South each saw starts fall by a little under 10 percent.

On a year-over-year basis, starts were up 9 percent for the country-as-a-whole. Starts surged in the Northeast by 57 percent compared to year-earlier levels. Starts were also up modestly in the South but were down slightly in the Midwest and West.

The following chart shows the starts by region for the last 25 months.

Completions bounce back

Nationally, completions of buildings with 5 or more units rose 27.3 percent in October from the month-earlier level, reaching 354,000 units on an annualized basis. This comparison was helped by the fact that the revised September level of completions was only 278,000 units on a seasonally-adjusted, annualized basis. Only June 2019 had fewer completions in the last two years. Compared to the year-earlier level, completions of building with 5 or more units in October were up 25.5 percent, although October 2018 was also a relatively week month for completions.

For the country as-a-whole, completions for multifamily housing (two or more units per building) were up slightly, rising 2 percent month-over-month, comparing three-month moving averages. Note that bad weather in late 2018 suppressed completions then and led to a surge in completions in early 2019, distorting the “natural” level of completions and making trends harder to spot. Still, completions have been running below the two-year average for the last 5 months. While this could indicate a softening in the market, it is at odds with the strength seen in permit issuance.

By region, the three-month moving averages of completions were up in the Northeast and the West but down in the Midwest and the South.

On a year-over-year basis, the three-month moving average of completions was up by 8 percent. By region, the story was again mixed with completions rising strongly in the West and the Northeast but falling modestly in the Midwest and the South.

Completions by region for the past 25 months are shown in the chart below.

All data quoted are based on seasonally adjusted results and are subject to revision.

Yardi Matrix reports on October rent growth


Yardi Matrix released its October report on the multifamily housing market. The report shows that the fundamentals of the market remain strong.

Rents show seasonal pattern of increase

The report showed that the nationwide average rent was up $1 in the month of October to a level of $1476 per month. The modest increase is in keeping with the usual annual pattern where rents rise strongly in the spring and summer but stagnate during the rest of the year. On a year-over-year basis, rents were up by 3.2 percent, in line with recent performance.

For reference, the Bureau of Labor Statistics (BLS) reported that the all-items urban consumer price index (CPI-U) was up 1.8 percent on a year-over-year basis in October. The shelter portion of the CPI was up 3.3 percent in the last 12 months, trailing only medical care services (5.1 percent) for the fastest rate of growth for the major categories tracked. The BLS also reported that average hourly earnings of all employees on private non-farm payrolls in October were up 3.0 percent over the last 12 months. Average hours worked was unchanged.

Phoenix and Las Vegas continue to lead in rent growth

The Yardi Matrix report focuses on the 30 largest metro areas and ranks them both by average rent growth over the last 12 months and also by rent growth in two sub-classes of apartments. These are the “renter by necessity” (RBN) class and the “lifestyle” (renter by choice) class.

The report identifies major markets with the highest average annual rent growth as Phoenix (7.9 percent), Las Vegas (6.4 percent), Raleigh (5.1 percent), Inland Empire (4.9 percent) and Sacramento (4.8 percent).

The major markets with the lowest average annual rent growth were Houston (1.2 percent), San Jose (1.2 percent), Miami (2.4 percent), San Francisco (2.4 percent) and Baltimore (2.4 percent).

Houston once again edged out San Antonio for the dubious honor of having the lowest occupancy rate of the top 30 metros, coming in with 93.0 percent. San Antonio’s occupancy rate was 93.1 percent. At the other end of the scale, the Twin Cities had the highest occupancy rate at 96.9 percent, followed by Boston at 96.6 percent.

In the 12 months to July, Seattle had the highest percentage apartment completions compared to existing stock at 5.1 percent, followed by Denver at 4.4 percent. While the occupancy rate was unchanged in Denver over the last 12 months, it actually rose in Seattle from 95.4 percent to 95.8 percent over that time despite all of the new supply.

Continuing a recent trend, the workforce housing (RBN) portion of the market experienced a higher rate of rent growth in October than did the lifestyle portion of the market. Rents in the RBN portion of the market went up by 3.7 percent, compared to only a 2.8 percent increase seen in the lifestyle product class.

The dark side of rent growth

Every month, the Yardi Matrix report discusses some aspect of the multifamily housing market. This month it discussed the fact that the continued strong growth in rents has caused more renters to be cost-burdened, which has in turn caused more legislatures to consider passing some kind of rent control laws. While mentions were made of the new laws in Oregon and California, most of the discussion in the report was about the New York law, which is by far the most onerous.

The complete report discusses some of the smaller markets. It has additonal information about the larger markets including numbers on job growth, completions of new units and occupancy rates. It also includes charts showing the history of rent changes in 18 of the top 30 markets over the last 4 years. It can be found here.


Setback in Seattle

supreme court

The Washington State Supreme Court has ruled in favor of the City of Seattle and against property owners who challenged two laws intended to address unconscious bias on the part of landlords. The laws were the First in Time law, requiring landlords to rent a property to the first qualified applicant, and the Fair Chance Housing Ordinance, prohibiting landlords from looking into the criminal backgrounds of potential tenants. The court’s actions overturn lower court rulings in favor of the landlords.

The property owners objected to these laws based on protections in the United States and Washington State constitutions against government takings of private property and for due process and free speech. Lower courts had found these arguments persuasive based on precedents established by earlier cases. A laymen’s reading of the decisions by the Washington State Supreme Court is that the justices decided that the lower courts erred by concluding that the Washington State Supreme Court had established protections that were broader than those found in the Federal Constitution. Also, the justices determined that recent rulings by the United States Supreme Court had effectively invalidated some of the precedents the lower courts had used as justification for their decisions. Therefore, they reversed the lower courts’ rulings.

Despite this loss for the landlords, the cases are not dead. Since the Washington State Supreme Court’s rulings upholding the First in Time Law and the Fair Chance Housing Ordinance were based on their interpretation of Federal case law, they will be appealed to the United States Supreme Court. The next step will be to see if the high court will hear the appeals.

The landlords in these cases are being represented by the Pacific Legal Foundation, a public-interest law firm that handles cases of government overreach and, particularly, property rights cases. More information on the cases can be found here.


Yardi Matrix reports on October rent growth

Yardi Matrix released its October report on the multifamily housing market. The report shows that the fundamentals of the market remain strong.

Rents show seasonal pattern of increase

The report showed that the nationwide average rent was up $1 in the month of October to a level of $1476 per month. The modest increase is in keeping with the usual annual pattern where rents rise strongly in the spring and summer but stagnate during the rest of the year. On a year-over-year basis, rents were up by 3.2 percent, in line with recent performance.

For reference, the Bureau of Labor Statistics (BLS) reported that the all-items urban consumer price index (CPI-U) was up 1.8 percent on a year-over-year basis in October. The shelter portion of the CPI was up 3.3 percent in the last 12 months, trailing only medical care services (5.1 percent) for the fastest rate of growth for the major categories tracked. The BLS also reported that average hourly earnings of all employees on private non-farm payrolls in October were up 3.0 percent over the last 12 months. Average hours worked was unchanged.

Phoenix and Las Vegas continue to lead in rent growth

The Yardi Matrix report focuses on the 30 largest metro areas and ranks them both by average rent growth over the last 12 months and also by rent growth in two sub-classes of apartments. These are the “renter by necessity” (RBN) class and the “lifestyle” (renter by choice) class.

The report identifies major markets with the highest average annual rent growth as Phoenix (7.9 percent), Las Vegas (6.4 percent), Raleigh (5.1 percent), Inland Empire (4.9 percent) and Sacramento (4.8 percent).

The major markets with the lowest average annual rent growth were Houston (1.2 percent), San Jose (1.2 percent), Miami (2.4 percent), San Francisco (2.4 percent) and Baltimore (2.4 percent).

Houston once again edged out San Antonio for the dubious honor of having the lowest occupancy rate of the top 30 metros, coming in with 93.0 percent. San Antonio’s occupancy rate was 93.1 percent. At the other end of the scale, the Twin Cities had the highest occupancy rate at 96.9 percent, followed by Boston at 96.6 percent.

In the 12 months to July, Seattle had the highest percentage apartment completions compared to existing stock at 5.1 percent, followed by Denver at 4.4 percent. While the occupancy rate was unchanged in Denver over the last 12 months, it actually rose in Seattle from 95.4 percent to 95.8 percent over that time despite all of the new supply.

Continuing a recent trend, the workforce housing (RBN) portion of the market experienced a higher rate of rent growth in October than did the lifestyle portion of the market. Rents in the RBN portion of the market went up by 3.7 percent, compared to only a 2.8 percent increase seen in the lifestyle product class.

The dark side of rent growth

Every month, the Yardi Matrix report discusses some aspect of the multifamily housing market. This month it discussed the fact that the continued strong growth in rents has caused more renters to be cost-burdened, which has in turn caused more legislatures to consider passing some kind of rent control laws. While mentions were made of the new laws in Oregon and California, most of the discussion in the report was about the New York law, which is by far the most onerous.

The complete report discusses some of the smaller markets. It has additonal information about the larger markets including numbers on job growth, completions of new units and occupancy rates. It also includes charts showing the history of rent changes in 18 of the top 30 markets over the last 4 years. It can be found here.

Philadelphia passes right to counsel law

On Thursday, November 14, the Philadelphia City Council passed bill 190386 giving low-income residents the right to be represented by an attorney paid for by the city in the event that they are facing eviction. The measure is expected to be signed into law by Mayor Kenney. The measure was supported by tenant’s rights groups and by the Philadelphia Bar Association.

For purposes of the law, “low income” is defined as anyone whose annual gross income is less than 200% of the federal poverty level. In Philadelphia, that is $24,980 for a single person and $51,500 for a family of four. Legal services will be provided by designated non-profit organizations and will be paid for through the Low-Income Tenant Legal Defense Fund, which is funded through allocations from the city’s budget. This fund reportedly contains $2.1 million at this time.

Legal proceedings for which representation will be provided include “Any judicial or administrative proceeding to evict or terminate the tenancy or housing subsidy of a Covered Individual, any proceeding deemed by a Designated Organization as the functional equivalent of such a proceeding, or any first appeal of such a proceeding”. Representation will be provided to tenants both of private landlords and to those residing in properties managed by the Philadelphia Housing Authority.

In promoting this legislation, the Philadelphia Bar Association cited a study by Stout Risius Ross LLC which found that only 11 percent of tenants facing eviction were represented by lawyers while 80 percent of landlords seeking eviction were so represented. It showed that tenants with legal representation were more likely to avoid eviction and were able to stay in their homes significantly longer even if they were eventually evicted. The study estimated that the city would save more than $12 in eviction related social service costs to tenants for each dollar in legal fees it spent fighting their evictions. The cost to the landlords for the city to avoid these expenses was not considered in the study.

Other cities which have passed “right to counsel” laws include New York City, San Francisco and Newark. Similar laws are being considered in Los Angeles, Denver and Detroit.