Multifamily Starts Still in Recovery
Multifamily production declined for the second straight month in August, as the market continued to readjust after the anomalous spike in June that resulted from a change in New York City building codes. The preliminary (seasonally adjusted annual) rate for starts in buildings with five or more apartments came in at  251,000 units in August—down 16.6% from a slightly revised 301,000 units in July, and down 24.4% from the number posted in August one year ago.

The Census Bureau's estimate for total five-plus starts through the first two-thirds of 2008 now stands at 198,900—up 19,000 units from the equivalent period in 2007. However, a large portion of this increase is due to the unusual surge that occurred in June. Moreover, 2007 turned out to be the weakest year for five-plus starts since 1996. 

The rate at which new-five-plus permits were issued came in at a seasonally adjusted annual 271,000 in August. This was down 15.3% from the previous month and 24.7% on a year-over-year basis, so the change in the permit rate was nearly parallel to the August movement in starts. 

Currently, there is considerable downside risk to NAHB's forecast of five-plus starts, given the turmoil in financial markets and resulting problems with access to capital that are adversely affecting virtually all businesses. [ return to top ]