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 | Jan 13, 2016
‘Socially engaged’ architect Alejandro Aravena named 2016 Pritzker Architecture Prize Laureate
Known for his inventive social housing initiatives in his native Chile, Aravena epitomizes the revival of a more socially engaged architect, the Pritzker jury stated.
Architects | Jan 12, 2016
Dear Architecture: It's time to create a level field for female designers
If architecture took one moment to be introspective, it would discover appalling imbalances between the opportunities for women and men, as Perkins+Will's Vershaé Hite and Brittany Eaker-Kirkland wrote in an open letter.
Great Solutions | Jan 6, 2016
Shepley Bulfinch develops elegant design solution to address behavioral issues in emergency departments
ED scheme allows staff to isolate unruly patients and visitors in a secure area.
Market Data | Jan 5, 2016
Majority of AEC firms saw growth in 2015, remain optimistic for 2016: BD+C survey
By all indications, 2015 was another solid year for U.S. architecture, engineering, and construction firms.
Architects | Jan 5, 2016
Potential vs. credential: How men and women differ in career progress
Recent research suggests that women face yet another career impediment: the confidence gap.
Architects | Dec 17, 2015
Capturing utilization and activity data in the workplace
While utilization is an important metric to inform how frequently a space is used, it’s important to consider activity data.
Architects | Dec 17, 2015
Four winners named in NYC sidewalk shed competition
Firms in the Construction Shed Design Competition made designs that are simple to build and use readily-available materials.
Architects | Dec 16, 2015
Lohan Anderson to close, join Wight & Co.
Dirk Lohan, Floyd Anderson and eight others will be hired by the Illinois-based Wight & Co. next month.
Architects | Dec 16, 2015
Architects create commission for diversity advancement
The 20-member group will assess recent data, set a plan of action, and report on results to the AIA Board of Directors.
Architects | Dec 15, 2015
ULI names Lord Richard Rogers the 2015 J.C. Nichols Prize winner
Rogers, Founder of Rogers Stirk Harbour + Partners, works on projects that “shine a spotlight on the challenges that people in urban areas are facing."