Multifamily Permitting, January 2013: Approaching Long Term Average via Axiometrics

The U.S. Census Bureau posted its January residential permitting numbers by metropolitan statistical area (MSA) on Wednesday, February 27. Privately-owned housing units authorized by building permit in January, measured on a seasonally adjusted annual rate (SAAR), were 925,000. This was an increase of 1.8% from the revised December rate of 909,000, and was 35.2% above the January 2012 estimate of 684,000. During January 2013, annual multifamily (MF) permits increased by 44.3% at the national level from the comparable period a year ago. Even with this increase, annual MF permitting activity was 1.9% below the long-term average. With the January 2013 MF permits at 274,640 units, annual MF permitting has now been above 200,000 for 15 consecutive months. The anticipation of moderating but still healthy apartment market fundamentals over the next two years is stimulating developers and investors to start new projects. Even with the first waves of permits issued during this upward cycle being turned into completions this year, completions will still remain slightly below the long-term historical average for the U.S. and most MSAs. By 2014, most MSAs will see their inventory growth pass the historical average. However, there are some MSAs, like Charleston, Raleigh, Washington, DC, Baltimore, Austin, Nashville, Philadelphia, and Seattle, where new supply will outpace the historical average rate this year.

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