Photo: Robert Clark
The market share of US multifamily for rent contruction was back on the rise in the third quarter.
But while starts were up, the average size of a typical apartment is falling below pre-crisis levels, according to report released today by the National Association of Home Builders (NAHB).
Over the third quarter, the share of multifamily for rent construction climbed up to an “elevated” level of 95 percent. By comparison, the historical low share of 47 percent was recorded during the third quarter of 2005, which NAHB says was during “the condo building boom.” The average share of 80 percent was set during the 22 years from 1980 through 2002.
There have been over 80,000 multifamily units that have started construction in 2017, compared to only 22,000 multifamily condo starts over the same period.
October proved to be a good month for total multifamily construction — starts, including for sale and for rent developments, rose 36.8 percent to 413,000 units following a weak September.
Meantime, the average per unit square footage of multifamily housing construction starts was 1,168 square feet, falling below the post-recession high of 1,247 set during the first quarter of 2015. Also, the median size was 1,117 square feet in the third quarter.
“As multifamily developers build more for-sale housing units in the years ahead, the average size of multifamily homes is likely to rise,” says NAHB, in the report.
The change in size observed in the multifamily market is at odds with the post-crisis increase in size of the typical new single-family home.
“Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions,” says NAHB.
Still, the typical size of new multifamily units remain below both the average and median sizes recorded before the Great Recession, when the market share of “for-sale multifamily was also considerably higher” than it is compared to today.
Click here to read the entire report.