Multifamily Family Built-for-Rent Share Reaches New High

BY ROBERT DIETZ

According to NAHB analysis of quarterly Census data, the market share of rental multifamily construction starts increased to 96% during the second quarter of 2020. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.

During the second quarter of 2020, there were only 3,000 condo multifamily units that started construction. There were 76,000 rental apartment starts. Condo construction has been weak since the end of the Great Recession.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to second quarter 2020 data, the average per unit square footage of multifamily housing construction starts was 1,126, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,0391 square feet for the second quarter of the year.

Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the second quarter of 2020, the one-year moving average for multifamily size was 1,109 square feet, while the median was 1,077. The current moving-average of median size is just 1% higher than the post-recession low, while the trailing average is now near post-recession low. Multifamily unit size may increase in the quarters ahead, as a market response to the coronavirus recession.