Starts Swing Back Up in May from April Low
For the month of May, the (seasonally adjusted annual) starts rate for buildings with five or more apartments came in at 328,000--up 35% from April's depressed number. As  noted in last month's Outlook, large month-to-month fluctuations are common in the multifamily starts series, and very often a low number one month is followed by a high one the next, as we've just seen in April and May.  Nevertheless, at 328,000 starts, the rate is the highest it's been since August of last year. Over the long run, that rate probably is too high to be sustained, just as April's (slightly revised) rate of 243,000 proved to be too low to be sustained. Looking ahead, there continues to be some reason for pessimism, as three-month absorption rates for newly completed apartments remain extremely low.  However, permit data suggest that, at least over the next couple of months, multifamily production could be fairly strong. The  rate at which new five-plus permits were issued rose 18% between April and May, while the number of permits unused at the end of the month increased by 5%.

Source: U.S. Census Bureau; NAHB Economics Group