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NJ Homebuilding Near 27-Year High On Multifamily Surge


6/25/15

by Patrick J. O'Keefe, Director of Economic Research

In May, New Jersey’s homebuilders capped the best three-month period since the 1980s housing boom, drawing the largest number of permits (i.e., authorizations to begin construction) since August 1988.

View the accompanying chartbook.

The recent surge in permitting has been concentrated in the construction of multifamily (i.e., attached) units, most of which will be apartments.
 
Single-family authorizations, which had increased with winter’s end, declined in May.
 
Year-to-date: total approvals through May were almost one-fifth (19.2%) greater than in 2014’s comparable period. The stronger performance during 2015’s first five months was attributable solely to increased multifamily activity, which substantially outpaced (up 40.1%) 2014’s first five months. Single-family permits through May lagged last year by 10.4%.
 
Month-on-month the total number of permits issued rose 14.5% as multifamily approvals increased by 20.6 % (after having almost tripled between March and April).
 
Single-family permits, which slipped (-6.3%) in May, were one-fifth (-21.3%) less than a year ago.
 
Year-on-year, May’s gains were two-thirds (66.7%) greater than the same month in 2014 as the surge in multifamily approvals (which more than doubled) was partially offset by a drip in single-family authorizations.
 
Adjusted data: Multifamily authorizations tend to be lumpy (i.e., individual approvals authorize the construction of numerous units). On the other hand, single-family permits, which authorize the construction of individual units, fluctuate with weather conditions.
 
Adjusting for those factors – by using a three-month moving average of seasonally adjusted data – the number of single-family units approved in May declined 8.4% from April’s adjusted level (i.e., when adjusted for seasonal variations, activity was weaker.)
 
Outlook: Multifamily activity was expected to be robust in 2015 but, after its recent surge, some deceleration appears likely. Single-family construction, on the other hand, appears to be range bound between 800 and 900 units per month.

The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither CohnReznick nor the author make any representation or warranty as to the accuracy or completeness of this information. CohnReznick and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.

 

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