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Residential starts and permits moved in opposite directions in May, with the natural timing delay between permits and starts reflected in this month's figures.
Total residential permits jumped 11.8% in May from April to a seasonally adjusted annual rate (SAAR) of 1.275 million units, while total starts dropped 11.1% to an annual rate of 1.036 million units, according to the U.S. Census Bureau. Housing starts reached an eight-year high in April and some adjustment was expected, but total permits were the highest since November 2007.
In addition, May's total residential permits were 25.4% above the May 2014 annual rate of 1.017 million units, the Census Bureau reported. Single-family permits increased 2.6% from April to an annual rate of 683,000 units and have increased 9.1% since May 2014.


The 557,000 multifamily units permitted from June 2014-May 2015 represented a 26.0% increase from April's annual rate and a 53.9% jump from May 2014. May's annual rate was the highest since June 2008.
Other U.S. Census statistics of note:
  • Single-family (SF) starts in the 12 months ending May 2015 measured 680,000 units, a 5.4% decrease from April's starts, but 6.8% higher than the May 2014 total. An average of 665,000 SF homes per month (SAAR) were started in the most recent 12 months, compared to a 623,000 average per month from June 2013-May 2014.
  • Multifamily (MF) starts decreased in May to an annual rate of 349,000 units, an 18.5% decrease from April's revised rate of 428,000. The May rate was 2.6% higher than the same period one year ago and is close to the June 2014-May 2015 average of 346,000 units.
  • Total residential permits by region in May were down in the South (-3.6%) and West (-1.9%), but up sharply in the Northeast (+77.7%) and Midwest (+16.3%), compared to April.
  • Total completions were up 4.7% from April to 1.034 million units, which was 14.5% higher than May 2014. SF completions were up 1.3% to 635,000 units for the year, while MF completions jumped 48.5% to 392,000 units from May 2014-May 2015. May's MF annual completions were 43.7% above the 12-month average of 272,700 units, the highest since August 1988.
The top 10 MSAs for MF permitting for the trailing 12 months ending May 2015 were:

The top eight metros for annual MF permits remained the same as last month, with Los Angeles jumping to No. 3, moving Dallas and Seattle down one spot each. Atlanta and Austin switched places, while Denver moved down one spot to No. 10. Miami came in at No. 9, displacing Orlando from the top 10.
The total number of annual MF units permitted in the top 10 metros (154,280) is up 7.2% from last month's top-10 total and is about the same as the total for the next 53 metros (154,913).
Within the current top 10 metros, annual MF permitting increased significantly from May 2014 in:
  • New York (+56%).
  • Seattle (+27%).
  • Houston (+21%).
  • Los Angeles (+20%).
Annual MF permitting increased moderately from May 2014 in:
  • Miami (+15%).
  • Washington, DC (+10%).
  • Denver (+10%).
  • Austin (+8%).
Annual MF permitting decreased from May 2014 in:
  • Dallas (-19%).
  • Atlanta (-4%).
Download the May 2015 permit trends tables here.
Please contact us if you have any questions.
Jay Denton
Senior Vice President
KC Sanjay
Sr. Real Estate Economist
Chuck Ehmann
Real Estate Economist

Multifamily Shortfall Will Take Years to Clear 

In a previous report, we discussed the low level of total residential starts compared to historical norms. Single-family (SF) starts, which are still well below their annual average for the past 20 years, have the largest shortfall among residential units. Multifamily (MF) starts, however, have rebounded to surpass their pre-Great Recession annual average, but there is still a large shortfall of MF units created after the housing bubble burst.


The chart below shows annual MF starts (not seasonally adjusted) from 1995 until May 2015. MF starts averaged 291,900 units annually from 1995 to the end of 2008, then 173,600 units annually during the recession. Starts reached a low of 82,900 in June 2010. Had there been no recession and had MF starts maintained their pre-recession annual average through 2013, construction on more than 562,000 additional MF units would have launched in the 2009-2013 timeframe, according to Axiometrics' apartment market research.

As mentioned above, MF starts have once again surpassed their pre-recession long-term average (LTA), averaging 329,100 units annually from January 2014-May 2015. This surplus over the previous LTA has reduced the shortfall by about 12%, to just more than 494,000 units (see chart).
If MF starts remain at their current 18-month year average, construction would start on 37,200 units per year more than the LTA. At that pace, it would take about 13 years to absorb the remaining shortfall. If, however, starts maintain the annual pace of about 346,000 units per year achieved so far in 2015, it would take just more than nine years to replace the multifamily units that were not started because of the Great Recession.

By the Numbers

The table below shows multifamily permitting and job gain/growth for some of the top metropolitan areas, with several categorized by state or region.

The table below highlights MF permitting by place. Some of the top places on a trailing 12-month basis through May 2015 were:

  • Borough of Brooklyn (14,601 units).
  • City of Houston (12,636 units).
  • City of Los Angeles (9,657 units).
  • Borough of Manhattan (9,243 units).
  • City of Seattle (8,383 units).
  • Borough of Queens (7,972 units).
  • City of Austin (7,853 units).
  • City of Dallas (6,752 units).

The top 40 places (out of 4,147 U.S. Census places) for permitting of properties with five or more units were (red shading denotes 100 or more units):

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