CDFA Survey Finds Housing Bond Issuance Continued to Increase in 2018

Private activity bond (PAB) issuance increased slightly from 2017 to 2018, according to the Council of Development Finance Agencies’ (CDFA) Annual Volume Cap Report for 2018. The report, released yesterday, presents data on how states allocate and utilize their private activity bond (PAB) cap each year. Similar to recent years, Housing Bonds, including single-family Mortgage Revenue Bonds (MRBs) and multifamily bonds, made up the bulk of PAB issuances in 2018.

According to the report, total PAB issuance was $25.3 billion in 2018, up just over a percent from $24.9 billion in 2017. According to CDFA, 2018 saw the second highest level of PAB issuance since CDFA starting tracking in 2005, trailing only 2007’s $28.5 billion.

Housing Bonds once again accounted for most of the increase in overall PAB activity. The report finds that state and local governments issued nearly $23.2 billion in Housing Bonds in 2018, up over 10 percent from $21 billion in 2017. Housing Bonds accounted for 92 percent of total PAB issuance in 2018, compared to 84 percent in 2017. This is the fifth consecutive year that Housing Bonds have made up at least 80 percent of all PABs issued.

Unlike previous years, the increase in Housing Bond production in 2018 was driven by single-family MRBs, issuance of which increased 51 percent, from $5.7 billion in 2017 to $8.6 billion in 2018. MRBs were the only major PAB activity area tracked by CDFA that increased year over year. CDFA is expected to release a slightly revised version of the survey shortly that will reflect lower MRB issuance than was reported yesterday. However, even with those changes, MRB issuance will still have increased substantially in 2018.

After increasing every year from 2015–2017, multifamily bond issuances declined 4.4 percent in 2018 to $14.6 billion. Multifamily bonds accounted for 62 percent of all Housing Bond issuances in 2018, compared to three-quarters in 2017.

The report also notes Mortgage Credit Certificate issuance was $4.9 billion in 2018, down 27 percent from $6.7 billion in 2017.