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Multifamily Drives Down Permits, New Construction

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Multifamily activity drove down overall housing permits and new construction last month, though there was an increase in completed apartment buildings. Construction activity in the Northeast was exceptionally strong.

In places where housing permits are issued, there were preliminarily 90,500 privately owned housing units authorized during February, bringing the year-to-date total to 187,200.

Last month’s activity worked out to a seasonally adjusted annual rate of 1.298 million, slowing from a downwardly revised 1.377 million one month previous.

But permit issuance accelerated from an upwardly revised 1.219 million in the same month last year.

The construction data was released Friday jointly by the Census Bureau and the Department of Housing and Urban Development.

While one-unit permits were off less than a percent from January 2018 to a seasonally adjusted annual rate of 872,000, the multifamily rate tumbled 15 percent to 385,000.

The overall seasonally adjusted rate of permit issuance in the South was 614,000, sinking from January more than 12 percent — the most of any region. The West was down 3 percent to 367,000.

But in the Midwest, the rate of permits rose 3 percent to 184,000, while it surged 13 percent in the Northeast to 133,000.

A seasonally adjusted 159,000 U.S. housing units were authorized but not started as of the end of last month.

The report indicated that home builders broke ground at a seasonally adjusted annual rate of 1.236 million in February 2018, retreating 7 percent from a month earlier and down 4 percent from a year earlier.

Although the one-unit rate for housing starts moved up 3 percent to 902,000, the rate on five or more units plummeted 28 percent to 317,000.

“Some multifamily pullback is expected after an unusually strong January reading,” National Association of Home Builders Chief Economist Robert Dietz said in a written statement. “Multifamily starts should continue to level off throughout the year.”

LendingTree Chief Economist
Tendayi Kapfidze noted in a written statement that because the data is “quite choppy,” the lead generation company prefers a three-month average.

“The three-month average of single-family starts of 875,000 is at its weakest level since October 2017, but we believe the uptrend remains intact,” Kapfidze said. “The multifamily three-month average is recovering having sunk to a four-year low in September.”

A seasonally adjusted 1.115 million housing units were under construction at the end of last month.

Construction was completed on 91,100 housing units in the latest report. During the first-two months of 2018, housing units completed amounted to 175,200.

Last month’s seasonally adjusted annual rate of completed construction rose 8 percent from January to 1.319 million. A 14 percent year-over-year gain was recorded.

The seasonally adjusted annual rate of completed construction on one-unit properties rose 3 percent from the first month of this year to 895,000, while the multifamily rate soared 22 percent to 418,000.

The overall rate in the Northeast skyrocketed 42 percent to 160,000. In the South, the rate jumped 11 percent to 659,000.

In the West, however, the seasonally adjusted annual rate was down more than 3 percent to 336,000, and the rate in the Midwest fell 3 percent to 164,000.

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