Housing Starts Not Keeping Up with Demand Single-Family Units vs. Multi-Family Units
Although the U.S. now has a healthy economy, incomes are on the rise, and growth in household formations has finally started to normalize, the housing industry cannot keep up.
This is the third factoid in a series of five factoids detailing slow-to-grow housing starts, low inventories, and rising mortgages and rents.
Single-Family Units vs. Multi-Family Units
Between 2010 and 2015, a shift occurred in housing starts between single-family and multi-family units. In 2010, the vast majority of housing starts (80.3%) were single family, while that number shifted to 64.3% in 2015. In 2015, multi-family units represented over a third of all housing starts signaling a growth in more affordable housing. Since that time, however, multi-family starts have fallen under 30% of total housing starts.
Regionally the ratio of single family to multi-family housing starts is strikingly different in the Northeast where multi-family housing starts represent 43.8% of all starts this year through May year-to-date. The Midwest has the lowest multi-family ratio at 25.6%.
Probably more worrisome than negative housing starts this year is the larger decline of building permits. With the exception of multi-family units up 2.9%, total building permits are down 2.4% and single-family units dropped 5.3% from 2018 to 2019 YTD.
Source: U.S. Census Bureau, U.S. Department of Housing and Urban Development