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.

New single-family home sales surged in July, as housing demand was supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.

Census and HUD estimated new home sales in July at a 901,000 seasonally adjusted annual pace, an approximate 14% gain over June and the strongest seasonally adjusted annual rate since the end of 2006. The April data (570,000 annualized pace) marks the low point of sales for the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January.

The gains for new home sales are consistent with the NAHB/Wells Fargo HMI, which equaled a data series high in August, demonstrating that housing is the leading sector for the economy. Consider that despite double-digit unemployment, new home sales are estimated to be 8% higher for the first seven months of 2020 compared to the first seven months of 2019.

Sales-adjusted inventory levels declined again, falling to a just a 4 months’ supply in July, the lowest since 2013. This factor points to additional construction gains ahead. The count of completed, ready-to-occupy new homes is just 61,000 homes nationwide. Total inventory declined almost 9% year-over-year, with inventory down to 299,000.

Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year-over-year. In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead.

Thus far in 2020, new home sales are higher in all regions. Sales on a year-to-date basis are 5% higher in the South, 9% in the West, 20% in the Midwest, and 22% higher in the Northeast.

Boosted by historically low mortgage rates, existing home sales, as reported by the National Association of Realtors (NAR), posted another record increase in July and surpassed pre-pandemic levels.

Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, soared 24.7% to a seasonally adjusted annual rate of 5.86 million in July, the largest monthly gain on record and the highest level since December 2006. On a year-over-year basis, sales were 8.7% higher than a year ago.

The first-time buyer share decreased to 34% in July from 35% last month, but is higher than a year ago (32%). However, price gains threaten this share in the future. The July inventory level fell to 1.5 million units from 1.54 million units in June and is down from 1.9 million units a year ago.

At the current sales rate, the July unsold inventory represents a 3.1-month supply, down from 3.9-month in June and 4.2-month a year ago. This low level supply of resale homes is good new for home construction.

Homes stayed on the market for an average of just 22 days in July, down from 24 days last month and 29 days a year ago. In July, 68% of homes sold were on the market for less than a month.

The July all-cash sales share was 16% of transactions, equal to last month but down from 19% a year ago.

Despite the recent fluctuation in sales, home prices remained strong. The July median sales price of all existing homes was $304,100, up 8.5% from a year ago, representing the 101st consecutive month of year-over-year increases. This is also the first time national median home price reached $300,000 level. The median existing condominium/co-op price of $270,100 in July was up 6.4% from a year ago.

Regionally, all four regions saw double-digit month-over-month gains for existing home sales in July, ranging from 19.4% in the South to 30.6% in the Northeast.  On a year-over-year basis, sales grew in the Midwest, South and the West (10.3%, 12.6% and 7.8% respectively), while sales declined 5.9% in the Northeast.

Though sales have picked up, rising home prices driven by low inventory and elevated jobless claims could be a bottleneck for future home sales. More listings and home construction are needed to meet this rising demand.

Over the first six months of 2020 – and after the onset of the impact of the coronavirus – total single-family permits issued year-to-date (YTD) nationwide reached 433,484. On a year-over-year (YoY) basis, this is an 3.8% increase over the June 2019 level of 417,453.

Year-to-date ending in June, single-family permits across the four regions ranging from an increase of 6.5% in the South to a decline of 1.7% in the Northeast. In multifamily permits, South reported a 3.1% increase while the other three regions reported declines – Northeast (-14.7%), Midwest (-6.2%), and West (-5.6%).

Between June 2019 YTD and June 2020 YTD, 34 states saw growth in single-family permits issued while 16 states and the District of Columbia registered a decline. South Dakota recorded the highest growth rate during this time at 36.7% from 1,178 to 1,610, while single-family permits in the District of Columbia declined by 50.0%, from 108 in 2019 to 54 in 2020. The 10 states issuing the highest number of single-family permits combined accounted for 61.8% of the total single-family permits issued.

Year-to-date, ending in June 2020, the total number of multifamily permits issued nationwide reached 224,918. This is 3.3% decline over the June 2019 level of 232,682.

Between June 2019 YTD and June 2020 YTD, 21 states and the District of Columbia recorded growth while 29 states recorded a decline in multifamily permits. North Dakota led the way with a sharp rise (449.0%) in multifamily permits from 98 to 538, while Michigan reported the largest decline of 55.1% from 3,117 to 1,401. The 10 states issuing the highest number of multifamily permits combined accounted for 64.3% of the multifamily permits issued.

At the local level, below are top 10 metro areas which issued the highest number of single-family permits. 

For multifamily permits, below are the top 10 local areas which issued the highest number of permits: