In September, the previous month’s drop in multifamily production was more than reversed, as starts in buildings with five or more apartments increased to a (seasonally adjusted annual) rate of 227,000. Although there’s no hard line of separation, buildings with at least five apartments are generally the universe of interest to multifamily developers and property owners. The preliminary five-plus starts rate for September was up 53 percent from August, and up over 57 percent on a year-over-year basis. In fact, 227,000 is the highest the five-plus starts rate has been since October of 2008. This (together with the generally upward trend in multifamily starts throughout 2011) is a strong sign of recovery, although 227,0000 is still a bit lower than the five-plus start rate was at any point from February 1997 through August of 2007—which illustrates how strong and consistent production was during that “golden age” decade for multifamily.
It’s not clear that the market is yet ready to sustain an annual production rate in excess of 200,000, however. For one thing, the rate at which new five-plus permits were issued dropped 13 percent in September, to 158,000—the lowest the rate has been since April—while the backlog of unused permits in the pipeline dropped 20 percent to 31,4000 (not seasonally adjusted)—the lowest since February.