by Calculated Risk on 5/17/2011 12:20:00 PM

Also from the Housing Starts report this morning ...

Although the number of multi-family starts can vary significantly month to month, apartment owners are seeing falling vacancy rates, and some have started to plan for 2012 and will be breaking ground this year. So we should see a pickup in multi-family starts in 2011.

However, since it takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year - there will be a record low number of multi-family completions this year.

The following graph shows the lag between multi-family starts and completions using a 12 month rolling average.

Click on graph for larger image in graph gallery.

The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.

For 2011, we should expect multi-family completions to be at or near a record low, and an increase in multi-family starts. It appears that the rolling 12 month starts (blue line) will be above completions (red line) next month.

Also today, the Census Bureau released the "Quarterly Starts and Completions by Purpose and Design" report for Q1 2011. Although this data is Not Seasonally Adjusted (NSA), it shows the trends for several key housing categories.

This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale.

Single family starts built for sale were up slightly from Q4, but still near a record low. Owner built starts were at a record low, and condos built for sale are scrapping along the bottom.

Only the 'units built for rent' is showing any significant pickup.

The largest category - starts of single family units, built for sale - is moving sideways, and will remain weak until more of the excess vacant housing units are absorbed.