Starts Finish Strong in 2003, Will Slow in 2004
In November, production of apartments in buildings with at least five units continued to hold strong at well above 300,000. The five-plus seasonally adjusted starts rate for the month was 319,000, up about 6% from October and 4% from November 2002. Through the first 11 months of 2003, starts are running about 1%t ahead of where they were last year. So whether or not 2003 eclipses 2002 -- the strongest year for multifamily starts since the tax-driven period of overbuilding in the 1980s -- depends on what happens in December (and on revisions to numbers posted earlier in the year).

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

For 2004, NAHB is projecting a 4% decline -- to 292,000 units -- a relatively modest pullback considering the current high vacancy rates. A strong condo component and sizeable production of federally subsidized low-income rental housing should continue to provide essential support to the market while better job growth will eventually help market rate rental housing. Apartment buildings with five or more units will continue to account for about 90% of total multifamily production. [ return to top ]