The average per unit square footage for multifamily housing construction starts was 1,119 ft for 3Q 2015, down from 1,247 ft (the post-recession high set earlier this year). According to Robert Dietz of the National Association of Home Builders, the current quarterly average is only 4% higher than the post-recession low.
Market mix is viewed as the key factor behind this change in multifamily average size. An elevated market share for rental multifamily homes is holding typical new apartment size below levels seen during the housing boom. However, as multifamily developers build more for-sale housing units in the years ahead, the average size of multifamily homes is likely to rise.
According to third quarter 2015 data from the Census Bureau and NAHB analysis, the average per unit square footage of multifamily housing construction starts was 1,119, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,042 square feet for the third quarter.
The typical size of newly built multifamily units remains below the averages/medians recorded during the boom years, when the share of for-sale multifamily was considerably higher. The share of multifamily housing starts built for-rent fell to a historical low of 47% during the third quarter of 2005. It is currently (94%) above the approximate 80% share recorded during the 1980-2002 period due to the ongoing surge in rental demand.
The reason for some of the recent change in multifamily average size is due to market mix. Renters tend toward smaller units than owner-occupiers. In 2012, for example, the median size of all multifamily units completed was 1,098 square feet. However, for rental apartments the median was 1,081, while it was a larger 1,466 for for-sale multifamily residences. As the for-sale share of multifamily returns back to historical norms in the years ahead, the size of a typical newly built multifamily housing unit will rise accordingly.