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 | Nov 16, 2015
Perkins Eastman, ForrestPerkins combine practices
The combined international firm will total almost 1,000 employees.
Architects | Nov 10, 2015
AIA releases nine new contract documents
Include six new forms for design-build projects.
Architects | Nov 9, 2015
Perkins+Will acquires London-based Portland Design Associates
The firms will work together to offer “future-proofing” insights to clients.
Architects | Nov 6, 2015
Hungary’s A4 Studio Wins World Architecture Community Award using ARCHICAD
Inspired by the suspended, community-designed shading structures seen on traditional Moroccan marketplaces, the Casablanca Market in Morocco allows traffic to flow through the arcade-like marketplace.
Healthcare Facilities | Nov 4, 2015
Hospital designers get the scoop on the role of innovation in healthcare
“Innovation” was the byword as 175 healthcare designers gathered in Chicago for the American College of Healthcare Architects/AIA Academy of Architecture for Health Summer Leadership Summit.
Office Buildings | Nov 3, 2015
Emotional intelligence and design
In a world in which technology and its skills are constantly changing, good people skills are becoming more important, writes VOA's Angie Lee.
Architects | Nov 2, 2015
NCARB: Interactive tool helps architects prep for exam
The Transition Calculator for the Architect Registration Examination (ARE) will help licensure candidates transition from ARE 4.0 to ARE 5.0.
Architects | Nov 2, 2015
China Accord: Design firms sign pledge to tackle climate change
52 companies will collaborate to reduce carbon emissions.
BIM and Information Technology | Oct 29, 2015
MIT develops ‘river of 3D pixels’ to assemble objects
The Kinetic Blocks can manipulate objects into shapes without human interference.
Architects | Oct 27, 2015
Top 10 tile trends for 2016
Supersized tile and 3D walls are among the trending tile design themes seen at Cersaie, an exhibition of ceramic tile and bathroom furnishings held in Bologna, Italy in October.
