Multifamily Condo Construction Starts Fell 28% in 2020


According to NAHB analysis of quarterly Census data, the market share of rental units of total multifamily construction starts ticked higher to near 97% during the fourth 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.

As demand shifted to suburban markets in 2020, condominium or for-sale multifamily starts declined by 28% for the year. During the fourth quarter of 2020, there were only 3,000 condo multifamily units that started construction. There were 84,000 rental apartment starts. For all of 2020, condo starts totaled 18,000 units, compared to 372,000 built-for-rent multifamily units. The year 2019 had 25,000 total for-sale multifamily units started.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to fourth quarter 2020 data, the average square footage of multifamily construction starts declined to 1,062, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,031 square feet for the final 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 fourth quarter of 2020, the one-year moving average for multifamily size was 1,086 square feet, while the median was 1,039. These measures are near 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.

Tags: , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: