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
| Nov 14, 2014
Haskell acquires FreemanWhite, strengthens healthcare design-build business
The combination expands Haskell’s geographic presence by adding FreemanWhite’s offices in Chicago, Charlotte, Nashville, and San Diego. FreemanWhite will retain its name and brand.
| Nov 14, 2014
What college students want in their living spaces
In a recent workshop with 62 college students, architects from Little explored the changing habits and preferences of today's students, and how those changes affect their living spaces.
| Nov 14, 2014
JetBlue opens Gensler-designed International Concourse at JFK
The 175,000-sf extension includes the conversion of three existing gates to international swing gates, and the addition of three new international swing gates.
Sponsored | | Nov 12, 2014
Eye-popping façade highlights renovation, addition at Chaffin Junior High School
The new distinctive main entrance accentuates the public face of the school with an aluminum tube “baguette” system.
| Nov 12, 2014
Collaboration as competitive advantage
A collaborative planning and design process may seem like a common-sense goal, but the concept can be a challenge to achieve in the fragmented AEC industry. SPONSORED BLOG
Sponsored | | Nov 12, 2014
Williams Scotsman plugs into the jobsite
Many of our customers conduct important business from their temporary modular jobsite office and most require access to technology to get their job done effectively and efficiently. SPONSORED CONTENT
| Nov 12, 2014
Chesapeake Bay Foundation completes uber-green Brock Environmental Center, targets Living Building certification
More than a decade after opening its groundbreaking Philip Merrill Environmental Center, the group is back at it with a structure designed to be net-zero water, net-zero energy, and net-zero waste.
| Nov 12, 2014
Refocusing the shifted line
A recent trend in the practice of architecture that I’ve been noticing is the blurring of responsibility between design and construction coordination. I’m not sure why this trend began, but the subject is worth exploring, writes FXFOWLE's Mark Nusbaum.
| Nov 12, 2014
Designs by three finalists for new Beethoven concert hall unveiled
David Chipperfield and Valentiny are among the finalists for a new concert hall being built to commemorate Beethoven’s 250th birthday in his hometown of Bonn, Germany.
| Nov 12, 2014
Forbes: Houston is America's #1 construction hotspot
A new list of America's 20 biggest boomtowns shows Houston on top, with New York City close behind, followed by Dallas, Washington, D.C., and Los Angeles.