The Commerce Department data released on August 19 suggests that, looking at a rolling 12-month total of multifamily starts without any seasonal adjustment, construction has hit its highest level since 1989 for the year ending in July.
This is less significant for economic growth than single-family homes, which have a bigger multiplier effect on both consumer spending and job growth, the Wall Street Journal reports.
“We will take what economic activity we can get, but our housing market model was designed in the U.S. to build a lot of single-family homes for owners, not multifamily homes for renters,” Diane Swonk, chief economist of Mesirow Financial, wrote Tuesday on the company's blog.
The boost to apartment construction, however, suggests that job gains are encouraging the creation of households, and that consumers' needs will require more construction, both for renters or for owners.
Renting has become popular, at least in part, because many Americans cannot afford the down payment for a house or can't get a mortgage, and others prefer the flexibility that comes with a lease.
Soon, however, rising rents could encourage renters to buy homes. A Labor Department report notes that rents were rising at their fastest pace in five years this July, up 3.3% from last year.
With apartment construction hitting a 25-year high, it's not surprising that apartment company stocks have been doing well. Shares of Equity Residential (EQR -0.13%) and AvalonBay Communities (AVB +0.22%) closed Tuesday at their highest levels since 1993 and 1994, when the companies went public, respectively.
Related Stories
Retail Centers | Jan 31, 2022
Amazon Style: Amazon’s latest innovative physical shopping experience
In January, Amazon unveiled plans to build a physical fashion store concept, dubbed Amazon Style, in Los Angeles. The e-commerce giant says the store will offer “together the best of shopping on Amazon–great prices, selection, and convenience–with an all new shopping experience built to inspire.”
Sponsored | BD+C University Course | Jan 30, 2022
Optimized steel deck design
This course provides an overview of structural steel deck design and the ways to improve building performance and to reduce total-project costs.
Laboratories | Jan 28, 2022
3 must-know strategies for developers in today’s life sciences industry
While the life sciences industry had been steadily growing, this growth exploded when the pandemic arrived—and there is no indication that this lightning-fast pace will slow down any time soon.
Cultural Facilities | Jan 27, 2022
Growth in content providers creates new demand for soundstage facilities
Relativity Architects' Partner Tima Bell discusses how the explosion in content providers has outpaced the availability of TV and film production soundstages in North America and Europe.
Sponsored | Webinar | Jan 27, 2022
On-demand webinar: Open plenum design with baffles
With their vast, airy aesthetics, open-plan interiors offer a feel that can inspire and support occupants. But they can also create acoustical challenges that negate the effects of all that beauty. Baffles are an ideal ceiling design solution that address both aesthetics and performance.
Architects | Jan 27, 2022
Gensler’s latest design forecast is also a call to action
The firm urges the AEC industry to take the lead in creating a fairer, cleaner built environment that faces many obstacles.
Architects | Jan 26, 2022
HMC Architects Welcomes New Director of Sustainability
The Sacramento studio of leading national architecture and design firm HMC Architects has announced the appointment of new Director of Sustainability Jennifer Wehling, who joined in December
Market Data | Jan 26, 2022
2022 construction forecast: Healthcare, retail, industrial sectors to lead ‘healthy rebound’ for nonresidential construction
A panel of construction industry economists forecasts 5.4 percent growth for the nonresidential building sector in 2022, and a 6.1 percent bump in 2023.
Sponsored | Steel Buildings | Jan 25, 2022
Structural Game Changer: Winning solution for curved-wall gymnasium design
Sponsored | Steel Buildings | Jan 25, 2022
Multifamily + Hospitality: Benefits of building in long-span composite floor systems
Long-span composite floor systems provide unique advantages in the construction of multi-family and hospitality facilities. This introductory course explains what composite deck is, how it works, what typical composite deck profiles look like and provides guidelines for using composite floor systems. This is a nano unit course.
