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November a Universally Strong Month for New Construction

by Peter Thomas Ricci

It was a month of thanksgiving for the nation’s homebuilders

furman-center-new-construction-income-inequality-affluence-rich-rental-housing

November offered U.S. homebuilders many reasons to give thanks, with permits, starts and completions all in positive territory.

According to the latest report from the U.S. Census Bureau, building permits rose 11 percent from October to November and 19.5 percent from Nov. 2014; housing starts rose 10.5 percent monthly and 16.5 percent yearly, and though completions slipped from October, they remained up 9.2 percent from last year.

Multifamily Propels Growth

As with past months of strong construction activity, the multifamily sector was behind November’s strong performance, which is hardly surprising given how important it has become for the market.

Take, for instance, how multifamily’s November performance contrasted with that of the single-family market:

  • While single-family permits were up 1.1 percent from October and 9.05 percent from Nov. 2014, multifamily permits rose 33.09 percent monthly and 46.87 percent yearly – and with multifamily projects taking between 12 and 18 months to complete, such permit numbers guarantee strong multifamily construction through 2016.
  • Similarly, with housing starts, the single-family market rose strongly, increasing 7.6 percent monthly and 14.63 percent yearly…although multifamily rose 21.71 percent monthly and 17.06 percent yearly.
  • Finally, though single-family had a small edge on multifamily with month-to-month completions (a 0.3 percent rise to multifamily’s 3.77 percent decline), it was a different story with year-over-year measurements, with multifamily’s 19.53 percent jump far ahead of single family’s 3.78 percent.

With those kinds of increases, multifamily’s market share has grown considerably in the last five years. In Nov. 2010, multifamily comprised 25.36 percent of all building permits, and 14.5 percent of all housing starts; fast forward to November of this year, and its share has risen to 43.91 percent for permits and 33.93 percent for starts.

It’s important to remember, though, that those increases are almost exclusively serving the nation’s rental markets. According to Census Bureau numbers, 93.4 percent of multifamily construction in 2015 has been intended for rental housing, up from 84.78 percent in 2010 and 53.33 percent in 2006.

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