According to NAHB analysis of quarterly Census data, the market share of rental units of multifamily construction starts remained elevated at 96% during the first quarter of 2021. 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 significantly. During the last four quarters, there were only 15,000 condo multifamily units that started construction, compared to 28,000 in the prior four quarters.
An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to first quarter 2021 data, the average square footage of multifamily construction starts declined to 1,068, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,016 square feet for the first 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 first quarter of 2020, the one-year moving average for multifamily size was 1,077 square feet, while the median was 1,034. 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.