Where Did the Condos Go?

The share of construction starts for condominiums continues to shrink as building activity for multifamily rental units increases.

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.

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