MultiFamily Market Outlook - 02/26/2007 (Plain Text Version)

View Graphical Version | Subscribe to NAHB Publications | Email our Editor...
NAHB Home Page| Browse other NAHB e-publications |Search back issues

In this issue:
Quarterly Update: Rents Up, Condo Absorption Surprisingly Strong
Year Ends with a Surge in Multifamily Starts
Real Rents Remain High, with Slight Year-End Drop
A Steady Economy, with Low Inflation, Low Interest Rates
Multifamily Stocks Again Show Record Performance

Year Ends with a Surge in Multifamily Starts

In December, housing starts in buildings with five or more units surged by 30%. The Census Bureau's (seasonally adjusted annual) five-plus starts rate came in at 350,000, up more than 30% from November's 268,000. The rate of permit issuance, which can be an indicator of future construction activity, also increased substantially. Five-plus permits were issued at a seasonally adjusted annual rate of 353,000 in December, up 17% from the previous month.

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

As always, it's advisable to keep things in perspective and avoid reading too much into a single month-to-month change. On a year-over-year basis, the five-plus starts rate was up less than 4% in December, and the five-plus permit rate was actually down year over year. Over the past six months, the industry has recorded four extremely week five-plus starts rates (around 250,000), one that was about average (September's 302,000), and one very strong number in December. The industry is unlikely to sustain a rate of production as high as 350,000 for long, just as it was unlikely to sustain a rate as low as the 250,000 seen in much of the last half of 2006. NAHB's estimate of a long-run sustainable trend is slightly under 300,000 five-plus units started per year. The NAHB forecast calls for a total of 265,000 five-plus starts in 2007, followed by 288,000 in 2008.