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January 2018 Construction Report

Multifamily Permitting and Starts Bounce Back

Thursday, March 1, 2018

The national multifamily slowdown reversed in January as the annual rate for both permits and starts shook off weather-related delays and increased from December.  Multifamily units authorized for construction jumped by 25.4% in January from the 12 months ending in December while total multifamily units started shot up by almost 20%, according to the latest U.S. Census figures.



Top Two Permitting Metros Show Signs of Slowing

By the Numbers

  • The 1.396 million total residential housing units permitted during the 12 months ending in January were, on a seasonally adjusted annual rate (SAAR), up 7.4% from both December’s and January 2017’s rates. Total residential permits are now at their highest level since June 2007.
    • Multifamily permitting, while up sharply from December 2017’s annual rate to 479,000 units, was up only 3.0% from January 2017’s annual rate. Multifamily permits topped 400,000 units for the fourth time in 12 months compared to eight of 12 months in the preceding year.
    • The annual rate of single-family permits slipped -1.7% from that of December at 866,000, but was 7.4% higher than the January 2017 rate. Single-family permitting has exceeded 800,000 units level in 10 of the past 12 months and matched or exceeded 850,000 units for four consecutive months.
  • Total residential construction starts of 1.326 million units in the 12 months ending in January were 9.7% higher than December and 7.3% greater than January 2017. With the exception of October 2016, the annual rate of total starts is also at its highest level since June 2007.
    • Annual single-family starts of 877,000 homes were 3.7% higher than December’s annual rate and 7.6% more than January 2017’s. Single-family starts are about 20,000 units greater than the 12-month average through January.
    • Multifamily construction starts of 431,000 units were 19.7% higher than December, and 3.1% more than January 2017’s annual rate. Annual multifamily starts exceeded 400,000 units for the first time since January 2017.
  • Total residential completions of 1.166 million units were down -1.9% from December’s rate but 7.7% greater than January 2017.
    • Single-family completions were up by 2.2% on an SAAR basis from December, and were 6.0% greater than the January 2017 annual figure.
    • Multifamily completions dropped -11.1% compared to December, but were 10.1% higher than January 2017.

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Other U.S. Census statistics of note, comparing January 2018 to January 2017 annual rates:

  • Total annual starts in January 2018 were down sharply in the Midwest (-25.7%) and down in the South (-3.4%), but up an incredible 70.1% in the West, while the Northeast saw a modest 2.4% increase.
  • Annual single-family starts were down in the Midwest (-12.4%), but up strongly in the West (38.0%) and Northeast (11.9%), and moderately in the South (2.0%).
  • Multifamily construction starts declined sharply in the Midwest (-60.3%), South (-15.9%), and Northeast (-11.9%), while they more than doubled in the West (148.2%).
  • Annual total permits increased in the West (27.7%) and South (8.1%), but declined in the Northeast (-19.6%) and Midwest (-4.5%).
  • The annual rate of single-family permits increased sharply in the West (32.0%) and moderately in the South (5.3%), but declined in the Northeast (-13.6%), and Midwest (-8.9%).
  • Annual multifamily permits rose in two regions, with the greatest increase in the West region (18.4%), followed by the South (12.1%). Multifamily permitting plunged in the smaller Northeast region (-31.7%) and declined in the Midwest (-5.2%).
  • Single-family completions were up only in the West (59.9%), and declined in the Northeast (-19.4%), Midwest (-6.0%), and South (-3.5%). Multifamily completions more than trebled in the Northeast (232.8%), were up in the Midwest (3.2%), and decreased in the South (-5.1%), and West (-3.9%).

Top Two Permitting Metros Show Signs of Slowing

The top 10 Metropolitan Statistical Areas for multifamily permitting for the trailing 12 months ending January 2018 were:

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While the entire list of top 10 permitting metros experienced increases in annual multifamily permitting from the same 12 months one year ago, there are signs that slowing is occurring when comparing them to permitting totals two years ago. New York, Dallas, Los Angeles, and Austin saw decreases in annual multifamily permitting from January 2016, with New York dropping by more than 50% as the bulge due to the 421-a tax incentive diminishes over time. Compared to last month, New York and Dallas’ 12-month multifamily permit totals dropped by 2,233 and 1,245 units, respectively.

All of the top 10 permitting metros remained the same as they did in the previous month, with the first four remaining in order. Denver moved up one spot to No. 5, while Austin moved up two spots to No. 6. Chicago remained at No. 7 with Washington, DC slipping from No. 5 to No. 8. Portland and Boston returned at Nos. 9-10. San Diego and Fort Worth joined the top 20 at the expense of San Francisco and Houston, which dropped to Nos. 21-22 spots.

Austin led the top 10 in annual multifamily permitting gains (+3,055), followed by Portland (+2,629), Boston (+2,359), and Chicago (+2,303). While New York and Dallas each increased by more than 1,000 units from the previous 12 months, their growth is slowing (as mentioned above). Charlotte, Riverside, Oakland, San Antonio, Sacramento, Nashville, and Fort Lauderdale also had multifamily permit gains of at least 1,000 units from last year.

Atlanta dipped one more spot to No. 13 in January with a decrease of 5,414 multifamily permits from last year. Orlando and Houston also experienced large decreases in permits of more than 2,900 units. Anaheim, Baltimore, and Salt Lake City decreased by at least 1,700 units from January 2017.

With all of the top 10 apartment markets reporting at least some increase in annual multifamily permits, the annual total of multifamily permits issued in the top 10 metros – 141,754 – was 11.1% greater than the 127,597 issued in the previous 12 months. The total number of permits issued in the top 10 metros was almost equal to the number of permits issued within the 11th-39th ranked metros. A year ago, permits issued in the top 10 metros almost equaled the 11th-31st ranked markets.

Access the latest permit trends tables in Excel format here.

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By the Numbers

The table below shows multifamily permitting and job gain/growth for some of the top metropolitan areas, with several categorized by state or region.

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The table below highlights multifamily permitting by place. Some of the top places on a trailing 12-month basis through January 2018 were:

  • City of Los Angeles (11,483 units)
  • City of Seattle (8,357 units)
  • City of Chicago (7,809 units)
  • City of Denver (7,717 units)
  • Mecklenburg County (7,589 units)
  • City of Austin (7,563 units)
  • City of Portland (6,528 units)
  • City of Washington (5,559 units)
  • Borough of Bronx (5,290 units)

The top 40 places (out of 5,073 U.S. Census places) for permitting of properties with five or more units were:

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