Coming off a good January, housing permits fell 5.5% in February. Multifamily permits fell 18.3% for the month, following a 14.4% rise the prior month. Permits for projects with 5 units or more have averaged a 463,000 unit annual rate over the past three months, which is 15.6% below the pace of starts. By contrast, single-family permits have averaged a 973,000-unit pace, which is 6.9% below the pace of starts.

 

Apartments account for the overwhelming majority of multifamily starts and overbuilding has been a recurring concern throughout the decade, despite strong demand and low vacancy rates. Affordability has been another recurring concern and the industry has been pivoting toward more affordable projects away from downtown areas.

The Wells Fargo Economics Group reports, "Most economic data prior to the intensification of the COVID-19 outbreak were showing at least modest growth. The housing data, however, have been the strongest of this expansion and were poised to see their best year in more than a decade.

That is what the takeaway would have been if so much of the economy was not hunkering down right now. We suspect that single-family homebuilding will show a great deal of resiliency this year but suspect that multifamily construction may slow as apartment operators focus more of their attention on current projects and current operations."