More renters are living in less space.
NAHB Eye on Housing reports that for-rent properties are dominating multifamily construction, and the new units being built are smaller in size than in previous years.
Third quarter 2016 data from the Census Bureau and NAHB analysis found that the average square footage of multifamily housing construction starts was 1,146, which is down from the post-recession high of 1,247 square feet in 2015 and the all-time high of more than 1,300 square feet in 2007.
The data also revealed that 92 percent of multifamily starts are built-for-rent, among the highest rate ever. From 1980 to 2002, approximately 80 percent of new multifamily units were built-for-rent.
The reason for some of the 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. When 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.