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
Architects | May 9, 2017
Movers + Shapers: The social connector
Studio Gang gains fans with buildings that unite people and embrace the outside world.
Architects | May 5, 2017
An acquisition extends Eppstein Uhen Architects’ national footprint
Has architects in 35 states after acquiring Burkettdesign in Denver.
Great Solutions | May 5, 2017
No nails necessary: Framing system comes together with steel zip ties and screws
Clemson University’s School of Architecture develops a patent-pending construction method that is gaining attention for its potential use in rapid, low-tech sustainable housing.
Multifamily Housing | May 3, 2017
Silicon Valley’s high-tech oasis
An award-winning rental complex takes its design cues from its historic location in Silicon Valley.
Architects | May 3, 2017
Avoiding trouble in paradise: Tips on building successfully in the Caribbean
The island setting itself is at the root of several of these disruptive assumptions.
Multifamily Housing | May 2, 2017
Multifamily housing: 7 exciting, inspiring innovations [AIA Course]
This AIA CES course features seven novel approaches developers and Building Teams are taking to respond to competitive pressures and build more quickly and with more attractive offerings.
Healthcare Facilities | May 1, 2017
Designing patient rooms for the entire family can improve patient satisfaction and outcomes
Hospital rooms are often not designed to accommodate extended stays for anyone other than the patient, which can have negative effects on patient outcome.
Architects | Apr 27, 2017
Number of U.S. architects holds steady, while professional mobility increases
New data from NCARB reveals that while the number of architects remains consistent, practitioners are looking to get licensed in multiple states.
Multifamily Housing | Apr 26, 2017
Multifamily amenity trends: The latest in package delivery centers
Package delivery centers provide order and security for the mountains of parcels piling up at apartment and condominium communities.