According to NAHB analysis of quarterly Census data, the market share of rental units of total multifamily construction starts remained at 96% during the third quarter of 2020. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.
During the third quarter of 2020, there were only 4,000 condo multifamily units that started construction. There were 103,000 rental apartment starts. Condo construction has been weak since the end of the Great Recession.
An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to third quarter 2020 data, the average square footage of multifamily construction starts declined to 1,065, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,020 square feet for the third quarter of the year.
Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the third quarter of 2020, the one-year moving average for multifamily size was 1,092 square feet, while the median was 1,048. These measures are at two-decade lows. Our forecast is for size to increase as multifamily building moves further out from urban cores as renters seek larger, more affordable housing due to the virus crisis.