The pandemic and rent crisis had a major impact on the multifamily housing construction market and the number of new housing permits issued. With fewer people moving into new apartments, construction companies, property corporations and real estate investors didn’t have a need to break new grounds.
But as the pandemic starts to subside, people are getting back to work and the rent crisis is easing. New rental unit construction is back on track and renters are again on the move.
We can now take a look at the statistics for new rental housing construction during the course of the pandemic and compare it to the previous year. From this, we can make some determinations about trends in the housing market and different geographic areas.
Multifamily national housing permit trends during the pandemic
Obviously, the pandemic hit certain parts of the country at different times. Over the course of 2020, there were spikes in cities like New York, Seattle, Los Angeles, New Orleans, Miami and others.
Comparing year-to-year housing permit trends during the pandemic
Despite quarantine, total homes remained in demand and construction boomed. Between March 2020 and the end of February 2021, overall building permit issuance continued to rise at levels higher than the previous 12 months.
Levels experienced a hefty yearly drop at the start of the crisis in April and May, but after that, it was full speed ahead. Total construction was up from the previous year in eight of the next nine months, peaking in December with a nearly 24 percent jump.
However, the story for multifamily units was quite the opposite. In the first three months of 2020, multifamily permits hit a double-digit percentage rate increase over the previous year. But in April, the trend inverted and saw a year-to-year drop of over 22 percent, followed by another 11 percent in May.
After a bit of recovery at the start of the summer of 2020, the bottom fell out again. August dropped by 28 percent and the drought hit its lowest by dropping down over 30 percent in October. As the nation began to crawl out of the crisis, new rental construction resumed — ending with February 2021 up nearly 30 percent from pre-pandemic levels.
Comparing month-to-month housing permit trends during the pandemic
While we often consider the time during the pandemic as a monolith, each month during lockdown told its own story. When comparing new construction permits from one month to the next (as opposed to year-to-year), trends over the course of the crisis come into focus.
Nowhere is this more evident than at the start of the pandemic. New permits for both single and multifamily construction were up significantly from pre-pandemic February 2020 into March, 16 percent for all units and 29 percent for multifamily. April into May turned the tables though — all permits were down 17 percent and multifamily units dropped almost 12 percent.
With warmer weather (and hope that the crisis would be short-lived), all construction rose month over month through the summer. But as the autumn wave came, demand waned and levels fell again for four out of the next five months for all permits and for three for multifamily buildings into 2021.
Metro areas with the most multifamily housing permits during the pandemic
As mentioned, the pandemic affected cities across the nation differently. And that holds true for new housing construction. In some big cities, life continued as usual for issuing permits for new rental multifamily buildings.
So which metro areas saw the most number of multifamily construction permits issued? Well, as they say, everything is bigger in Texas — that is certainly the case here. But first, it’s the nation’s largest city.
Unsurprisingly, the New York City metro area issued the most new multifamily permits, by a gigantic margin. The New York region dispensed nearly 37,000 permits. It was the only city to hand out over 20,000 — much less 30,000 — which was 17,440 more than city No. 2.
But that doesn’t mean the pandemic didn’t hit the Big Apple construction market. As giant as that figure is, it’s down 14 percent from the year prior. Still, multifamily permits represented nearly three-quarters of all permits.
After that, all eyes are on Texas. Austin, Houston and Dallas come in at Nos. 2, 3 and 4. All three markets issued over 16,000 multifamily permits. But common statehood is where the similarity ends. The total in Austin represents nearly half of all permits and was up 15 percent over 12 months. Dallas, on the other hand, issued 37 percent fewer multifamily permits than the year before the pandemic, representing just a quarter of all permits.
Seattle/Tacoma and Greater Los Angeles rank next, both offering 60 percent of all permits to multifamily housing — both down double digits from the previous year. And along with Austin, the D.C./Northern Virginia and Twin Cities regions saw a rise in multifamily permits from before the crisis.
Metro areas with the fewest multifamily housing permits during the pandemic
But what is on the opposite end of the spectrum? Not every market was able to keep construction booming. Where did multifamily housing construction come to a near standstill during the pandemic?
As expected, most of the cities with the fewest permits issued were in the South. Overwhelmingly, Southern cities saw little new rental construction. But not all had a drop from the year prior. The metropolitan area that saw the fewest multifamily permits was Jonesboro, AR, doling out just 76. Here, the crisis was felt, with the rate down 16.5 percent from a year ago. Accordingly, that represents barely 9 percent of all permits issued.
However in No. 2, Hickory, NC, there were 78 multifamily permits issued while there were just 14 single-family versions filed. While Canton, OH, at No. 3, only distributed 142 multifamily permits — that was over 35 percent more than 12 months before.
Birmingham offered just 308 multifamily permits, the fewest for any metro area with over a million residents. Greater Albuquerque, with just under a million residents, issued just 324, the least of any western city.
Metro areas with the highest percentage of multifamily housing permits issued
Sheer numbers of permits issued only tell half the story. Many large cities kept doling out multifamily housing permits throughout the pandemic, and the larger the metro area, the more permits kept coming in many cases. Nine of the top 10 permit-issuing markets were among the 16 largest metros in the nation.
A complementary metric would be considering the percentage of permits designated for multifamily use in each metro area. These are the markets where new rental construction outpaced the total regardless of population.
While Hickory ranked second-fewest multifamily permits overall above, the metro area of 370,000’s ratio of 78 multifamily permits to just 14 single places it as the top new rental market over the course of the pandemic. Despite those small numbers, that’s 7 percent more permits issued than the year prior.
On the flip side, several cities in the top 10 are metro areas of large metropolises. Big cities where apartment and rental living are commonplace continued most of its permit issuing. New York, San Diego, Boston and both Bay Area metros land in the 60 percent and higher range of multifamily permits to all permits.
New Haven, Gainesville, Princeton and Madison all also fall within the top 10. What do they all have in common? They are all major college towns, where a high percentage of apartments would be expected. In fact, Trenton, home to government employees and also some Princeton college students, saw a substantial 87 percent increase in the number of multifamily permits issued year-to-year during the pandemic.
Metro areas with the lowest percentage of multifamily housing permits issued
On the other end, a number of metro areas just weren’t all that into rentals in general. There were seven markets in the nation where fewer than 10 percent of all construction permits issued were for multifamily housing over the pandemic. Notably, these seven metros were all in the South, with the lowest five all in the Deep South.
With just one exception, every one of the top 10 metros with the fewest multifamily permits dispensed saw a significant drop from the prior pre-pandemic year. Seven of these were down in issuances by over 40 percent.
Columbia, SC, saw over 5,000 total permits handed out. However, the city issued just 163 multifamily permits, the fourth-fewest total in the nation, meaning only 3 percent of permits were for rental buildings. Before the pandemic, nearly a third of permits distributed in the Sarasota–Bradenton region were for multifamily buildings. But a year later, that figure had dropped a massive 70 percent to just under 10 percent.
Bucking the trend was Birmingham. The largest city in Alabama offered just 308 multifamily permits, the fewest for any metro area with over a million residents. But what’s even wilder is that figure was up a whopping 130 percent from the previous year.
What this shows is that in places with the fewest multifamily permits issued by percentage are metros that saw the most growth for single-family residences. In fact, five of the top 10 lowest multifamily issuances were also among the 15 markets that saw the highest percent growth in single-family construction permits in the nation.
Find more about the markets where new single-family-home availability is up by visiting the Redfin Data Center.
Metro areas with the largest YoY growth in multifamily housing permits during the pandemic
Based on everything learned here, which metropolitan areas saw the most growth in rental building construction during the pandemic? The metric that may best highlight is where the percentage in multifamily permits increased the steepest over the previous year.
Far and away, the largest increase was on the Mississippi coast in the Gulfport–Biloxi region. That area saw a near 240 percent increase year to year. Indeed, the three metros with the highest increases were all in the Deep South.
Interestingly, the next three markets that saw the most marked increase are all college towns, the Trenton region (home to Princeton), Raleigh (North Carolina State University) and Madison (University of Wisconsin). This possibly reflects the number of dormitories closing during the crisis, increasing the need for residential apartments.
The end of the top 10 showcase large cities, generally in the west. These are the highest yearly increases among metros with a population of over 2 million.
Metro areas with the largest YoY decrease in multifamily housing permits during the pandemic
And lastly are the metropolitan areas where the percentage of multifamily permits dropped markedly during the pandemic from the year prior. These regions could be considered where new rental construction all but paused.
With a drop of 70 percent from the year before, the Sarasota-Bradenton market saw the most precipitous dip of any in the nation. In raw numbers, that’s nearly 2,200 fewer permits than pre-crisis. No. 2 Atlanta saw a very sharp decline, the most of any metropolis. Its 63 percent decrease meant over 4,000 fewer multifamily permits during the pandemic than the previous year.
While Provo experienced an over 40 percent decrease in multifamily permits, it saw a 15.6 percent increase in permits overall. This showcases a solid increase in single-family permits. On the other hand, Olympia experienced a nearly 50 percent decrease in multifamily permits while the Washington capital faced an over 30 percent decrease in total permits.
What new multifamily permit levels mean to you
One might conclude that new construction permitting would have decreased on all fronts during the 2020-2021 pandemic crisis, particularly among multifamily dwellings. However, the numbers show that to not be the case. Where you were during the pandemic — and when — affected whether permitting stayed steady or dropped off.
Overall, permits spiked in places like New York and Texas and many dipped in the Deep South. But digging through the numbers showed that each of the nation’s markets experienced multifamily building construction differently during the crisis. In most corners, construction has started to rebound to pre-pandemic levels, despite skyrocketing construction costs.
No matter where you might be looking to move, be sure to find your next great place to live by checking out apartments for rent on Rent..
Methodology
Building permit information comes from the U.S. Census Bureau. Our study looks at the number of permits issued during the first full year of the pandemic (March 2020 – February 2021) and compares this build rate to the previous time period in specific metro areas across the country. For this research, we consider “multifamily” as permits for properties with 5+ units.
We excluded metro areas that had zero new permits issued in any month from March 2019 to February 2021.
