Decline in Multi-Family Starts Clouds Outlook but NAHB Sees Stablilzation in 2nd Quarter

April 24, 2009
The always volatile multi-family sector pushed nationwide housing starts down 10.8 percent in March as production of single-family homes remained unchanged, according to the U.S. Commerce Department.

The always volatile multi-family sector pushed nationwide housing starts down 10.8 percent in March as production of single-family homes remained unchanged, according to the U.S. Commerce Department. Overall starts fell to a seasonally adjusted annual rate of 510,000 units, due entirely to a 29 percent reduction on the multi-family side that largely offset a big gain in apartment and condo building in the previous month.

NAHB Chief Economist David Crowe said the Census numbers were right on target with NAHB’s forecast, which anticipates that housing starts will bottom out in the second quarter, after new-home sales have stabilized. “Single-family starts remained virtually unchanged over the past three months, indicating that we are closing in on a bottom,” he said. “Multi-family starts — which tend to bounce around from month to month — were responsible for the decline in total starts as they readjusted following a substantial gain in February.”

While total housing starts declined 10.8 percent to a seasonally adjusted annual rate of 510,000 units in March, single-family housing starts remained exactly on par with the previous month, at a 358,000-unit rate. Multi-family starts declined 29 percent in the month to a 152,000-unit rate, erasing a large portion of the gain posted by that sector in the previous month. Housing starts were down in three out of four regions in March. The Midwest posted a gain of nearly 16 percent and the Northeast gained 6.3 percent. Meanwhile, the South a 16.8 percent decline; and the West a 26.3 percent decline.

Building permits also fell in March. Total permits declined 9 percent to a seasonally adjusted annual rate of 513,000 units, and single-family permits dropped 7.4 percent to 361,000 units, Multi-family permits slid 12.6 percent to 152,000 units. Permit issuance declined across every region except the West in March. While the West posted no change, the Northeast posted a 24.3 percent decline; the Midwest a 2.3 percent decline; and the South a 10.3 percent decline.