In October, the previous month’s upward trend in multifamily production continued, as starts in buildings with five or more apartments came in at a (seasonally adjusted annual) rate of 285,000. Although the line isn’t completely solid, buildings with at least five apartments are generally a reasonable way to draw a distinction between smaller “mom and pop” operations and the province of professional property owners, managers and multifamily developers.
At 285,000, the Census Bureau’s preliminary five-plus starts rate for October was up 10 percent from September and up 63 percent year over year—illustrating how far the recovery in multifamily production has come from the historic trough of 2009 and 2010. In fact, 285,000 is high enough to rank among the lower monthly five-plus starts rates recorded during what many consider to be a “golden age” of sustainable multifamily production (roughly 1997 through 2006).
Also in September, the rate at which new five-plus permits were issued dropped 10 percent, to 280,000, and the backlog of unused five-plus permits in the pipeline fell by 7 percent, to 42,600. Both these permit numbers were up more than 40 percent year over year, however, so they aren’t a major sign of weakness (although a five-plus starts rate as high as 285,000 may be a little hard to sustain in the short run).