Between the number of cranes, job sites, and advertisements announcing “New Condominiums Coming Soon!” it's hard to believe that multifamily housing starts actually decreased in 2004. But they did, albeit by a hair.

According to the U.S. Census Bureau, starts for multifamily structures of five units or more decreased by almost 4 percent, from 315,200 to 303,000 units.

(At the same time, though, building activity among structures of two to four units jumped in 2004. Starts for these buildings increased 26 percent, from 33,500 units in 2003 to 42,300 last year. As a result, combined multifamily production dropped by less than 1 percent in 2004.)

Much of last year's activity, of course, came from condos, which has been a hot spot for the industry. But things may be cooling off a little. The NAHB, for one, forecasts housing starts for structures of five or more units to stay at 303,000 in 2005.

Condo builders are also watching the market carefully. “We continue to be cautiously optimistic, while making adjustments in our business plan for the possibility of interest rate increases and slowing sales,” says Scott K. Choppin, managing partner for Urban Pacific Builders in Long Beach, Calif., who says downtown is the place to be. “The urban infill market is generally so product-constrained that we see a continuing strong market for well-located, highly amenitized infill transactions.”

Source: U.S. Census