According to NAHB analysis of quarterly Census data, the market share of rental units of multifamily construction starts remained elevated at 95.2% during the second 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. This occurred as overall multifamily starts staged a strong rebound during the second quarter, with the quarterly starts total the highest since 1987.

As demand shifted somewhat to suburban markets in 2020, condominium or for-sale multifamily starts have declined off of already low levels. During the last four quarters, there were only 18,000 condo multifamily units that started construction, compared to 24,000 for 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 second quarter 2021 data, the average square footage of multifamily construction starts declined to 1,045, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was just 990 square feet.

Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the second quarter of 2020, the one-year moving average for multifamily size was 1,058 square feet, while the median was 1,012. These measures are at more than two-decade lows. However, 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: built for rent, economics, home building, housing, multifamily, multifamily built for rent, multifamily size