The elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-recession period. As multifamily developers build more for-sale housing units in the years ahead, the average size of multifamily homes is likely to rise. However, size fell at the start of 2018 according to NAHB analysis of Census data.

According to first quarter 2018 data, the average per unit square footage of multifamily housing construction starts was 1,082, off from the post-recession high set at the start of 2015 (1,247 square feet) and down from the last quarter of 2017 (1,162). The median was 1,110 square feet at the start of the year.

Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the first quarter of 2018, the one-year moving average for multifamily size was 1,140 square feet, while the median was 1,090. The current quarterly median and averages are 3% and 2% higher, respectively, than post-recession lows. Nonetheless, the typical size of newly built multifamily units remains below the averages/medians recorded during the pre-recession years, when the share of for-sale multifamily was considerably higher.

The market share of rental multifamily construction starts remained elevated at 94% during the first quarter of 2018. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. The average share of 80% was recorded during the 1980-2002 period. There were only 22,000 multifamily condo units that started construction over the last year, 15% lower than the 26,000 recorded during the prior four quarters.

Tags: economics, home building, housing, multifamily, multifamily built for rent, multifamily size