As the single-family market continued to plummet in April, multifamily housing starts rose by a seasonally adjusted 340,000 units—a 36 percent increase, according to the Commerce Department.
That pace is 17.6 percent above April 2007. In March 2008, starts dropped 35.1 percent to a 250,000-unit pace. Bernie Markstein, senior economist and director of forecasting for the Washington, D.C.-based National Association of Home Builders, says through the first quarter of 2008, starts averaged around 320,000 units. “Multifamily, in particular, tends to jump around from month to month,” Markstein says.
Multifamily won't see a lot of new for-sale single-family competition come on the market anytime soon. Single-family starts dropped 1.7 percent in April to a seasonally adjusted annual rate of 692,000 units. That's the lowest monthly production rate since January 1991, and it's a whopping 42.2 percent below April 2007's totals. “We're seeing the home ownership rate falling,” Markstein says. “The rental rate is going up.”
The increase in multifamily starts helped the total number of housing starts in April rise 8.2 percent to a seasonally adjusted annual rate of 1 million units. Total starts were down 30.6 percent from a year earlier.
Multifamily permits in April were also up, rising 6.8 percent to 332,000 units, 19.2 percent below a year earlier. Also, total building permits rose 4.9 percent to a seasonally adjusted annual pace of 978,000 units. Still, total permits were down 34.3 percent from 2007.
Markstein doesn't expect new multifamily construction to increase until 2009. Even then, he says it will be a “slow recovery.” In fact, he expects starts to fall into the 280,000 range in 2008. “We're not that far from the bottom, but there's a lot of inventory out there that needs to be worked out,” he says.