Multifamily Starts Remained Elevated in Q2 of 2021

Quarterly U.S. Census Bureau data, with analysis provided by the National Association of Home Builders (NAHB), reveals that the market share of rental units of multifamily construction starts remained elevated at a reading of 95.2% during Q2 of 2021. The historical low share of 47% was set during Q3 of 2005, during the condo building boom.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to Q2 of 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. The NAHB analysists noted that 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, the NAHB 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.