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
| Aug 22, 2014
Spireworks app lets users control a piece of the New York skyline
Mark Domino, the son-in-law of developer Douglas Durst, has developed an app, called Spireworks, that allows anyone with a smartphone to change the color of a building's lights.
| Aug 21, 2014
Ranked: Top science and technology sector AEC firms [2014 Giants 300 Report]
HDR, Affiliated Engineers, and Skanska top BD+C's rankings of the nation's largest S+T sector design and construction firms.
| Aug 21, 2014
Ranked: Top convention center AEC firms [2014 Giants 300 Report]
Gensler, AECOM, and Hunt Construction top BD+C's rankings of the nation's largest convention center design and construction firms.
| Aug 21, 2014
Strategies for providing great customer service
Customers are inherently inefficient and inconvenient to do business with, writes Customer Service Consultant Micah Solomon, in a recent Forbes post. That’s why he believes great customer service depends on understanding this. SPONSORED CONTENT
Sponsored | | Aug 21, 2014
Defining the measure of success when implementing new technologies
Sasha Reed and Chad Dorgan, McCarthy Building Cos.’s Vice President of Quality and Sustainability, discuss the keys to managing innovation within a large construction firm. SPONSORED CONTENT
| Aug 21, 2014
RTKL's parent company Arcadis acquires Callison
The acquisition of Callison, known predominantly for its leadership in retail and mixed-use design, builds on Arcadis’ strong global design and architecture position, currently provided by RTKL.
| Aug 21, 2014
Must See: Detroit's Beaux-Arts parking garage
An opulent Renaissance Revival building in downtown Detroit is being used as a parking garage.
| Aug 20, 2014
WELL Building: The next step in green sports construction
The WELL Building Standard, a new protocol that focuses on human wellness within the built environment, is a particularly good fit for sports facilities, write Skanska's Tom Tingle and Beth Heider.
| Aug 20, 2014
Seattle's King Street Station thoughtfully restored [2014 Reconstruction Awards]
After years of neglect and botched renovations, King Street Station sparkles once again.
| Aug 20, 2014
Tour an office with no assigned workstations [slideshow]
The New York office of the Gerson Lehrman Group recently redesigned its office without personal desks or cubicles. The company gave each of its 250 employees a locker, a laptop, and told to work anywhere they wanted, according to Business Insider.
