New multifamily units are standing in stark contrast to new single-family homes in terms of size, according to the NAHB Eye on Housing blog. While single-family homes have grown to the largest average size ever, multifamily units are below levels seen during the pre-recession period. This can be attributed to an elevated market share for rental multifamily homes.
However, multifamily builders are expected to build more for-sale housing units in the future, and the average size of multifamily homes is likely to increase. In the first quarter of 2016, the average per unit square footage of a multifamily housing construction start was 1,184, a decline from the post-recession high seen at the beginning of 2015 of 1,247 square feet. The median for the first quarter was 1,094 square feet.
Additionally, the share of built-for-rent multifamily housing starts is currently at 92 percent, almost twice as high as the historical low of 47 percent witnessed during the third quarter of 2005. As levels of demand for built-to-rent multifamily housing begin to return to levels similar to the 80 percent share seen between 1980 and 2002, the median size of a newly built multifamily housing unit will begin to rise. This is because for-sale multifamily units tend to be larger than for-rent units. As more for-sale units come onto the market, the median size for all multifamily units will increase accordingly.
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