Contractors broke ground on fewer large apartment buildings and condominium complexes in October than in any month since the government began keeping track of them in 1963, the Commerce Department reported yesterday.
Construction of larger projects was running at the annual rate of 156,000 units in October, the department said, compared with 340,000 only a year ago.
The figure, covering buildings of five units or more, was contained in the government's overall construction report for October that showed housing starts of all kinds -- from single family homes to duplexes to large apartment buildings -- declined for an unprecedented ninth month in a row.
But it was the drop in multifamily housing that was most dramatic. Nationwide, construction starts of all buildings with two or more units plummeted 53.3 percent between October 1990 and October 1989. On an annualized basis, that represents a drop from 400,000 units to 187,000. In the mid-1980s, construction was running at a rate of 600,000 to 700,000 units a year.
"It's gone off a cliff," said Kent Colton, executive vice president of the National Association of Home Builders.
"We keep thinking it'll bottom out -- and it just doesn't," said Robert Sheehan, economist for the National Apartment Association.
Both blamed the continuing declines on a complex combination of factors, including apartment overbuilding through much of the 1980s and the resulting overcautious lending by banks and savings and loan institutions. In addition, they said, many developers have found dwindling consumer demand for their apartment buildings because rents are higher than many renters can afford to pay.
Another issue is long-delayed federal handicapped accessibility guidelines that have made builders reluctant to launch projects until all the regulatory details have been ironed out.
Housing start figures are significant because construction industry declines generally have a ripple effect throughout the economy. For example, when housing starts fall, construction industry employment also declines. A general rule of thumb is that 100,000 jobs are lost for each decline of 100,000 starts in the multifamily housing category, while about 170,000 jobs are lost for every decline of 100,000 starts in the single-family housing category, according to the NAHB.
Such slowdowns can also have long-term effects on other people.
For would-be tenants able to afford the rents, there is now a plentiful supply of apartments from which to choose, and the nation's overall apartment vacancy rate is about 8.9 percent.
But as the supply of new buildings dwindles, demand generally catches up and rents rise.
"In the long run," the multifamily construction slowdown "means rents will go up well above the inflation rate again, probably sometime in 1992 or 1993," Sheehan said.
Prospects for a quick recovery in multifamily construction appear dim. Housing permits for multifamily construction, which indicate builders' plans for future development projects, fell 47 percent in the year, according to the Commerce Department figures.
Single-family housing starts also fell, though not as dramatically.
About 854,000 single-family homes were started in October, compared with about 1 million in October 1989.
Single-family construction permits fell from about 1.4 million, seasonally adjusted, in October 1989 to about 925,000 in October 1990.