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
| Mar 31, 2014
Extreme conversion: Soaring Canadian church transformed into contemporary library
Even before the St. Denys-du-Plateau Church was converted into a library, it was an unusual building, with a towering nave designed to mimic a huge tent inflated by the wind.
| Mar 31, 2014
Tips for creating a competitive bid using codes and loads
Landing a project feels like winning a prize, sort of like finding that forgotten $20 bill in the pocket of a pair of jeans you haven’t worn in a while. But living on the “chance” of winning a job isn’t a great way to pay your electric bill. So, how do you swing the chances in your favor?
Sponsored | | Mar 30, 2014
Ontario Leisure Centre stays ahead of the curve with channel glass
The new Bradford West Gwillimbury Leisure Centre features a 1,400-sf serpentine channel glass wall that delivers dramatic visual appeal for its residents.
| Mar 28, 2014
Crazy commuting: British artist wants to construct 300-foot water slide on city street
Bristol-based artist Luke Jerram hopes that the temporary installation, once funded, will encourage the public to think about "how we want to use the city, and what sort of future we want to see.”
| Mar 27, 2014
Develop strategic thinkers throughout your firm
In study after study, strategic thinkers are found to be among the most highly effective leaders. But is there a way to encourage routine strategic thinking throughout an organization?
| Mar 27, 2014
16 kitchen and bath design trends for 2014
Work on multifamily housing projects? Here are the top kitchen and bath design trends, according to a survey of more than 420 kitchen and bath designers.
| Mar 26, 2014
A sales and service showcase
High Plains Equipment, a Case IH dealership in Devils Lake, N.D., constructs a larger facility to better serve its customers.
| Mar 26, 2014
Free transit for everyone! Then again, maybe not
An interesting experiment is taking place in Tallinn, the capital of Estonia, where, for the last year or so, its 430,000 residents have been able to ride the city’s transit lines practically for free. City officials hope to pump up ridership by 20%, cut carbon emissions, and give low-income Tallinnites greater access to job opportunities. But is it working?
| Mar 26, 2014
Callison launches sustainable design tool with 84 proven strategies
Hybrid ventilation, nighttime cooling, and fuel cell technology are among the dozens of sustainable design techniques profiled by Callison on its new website, Matrix.Callison.com.
| Mar 26, 2014
Zaha Hadid's glimmering 'cultural hub of Seoul' opens with fashion, flair [slideshow]
The new space, the Dongdaemun Design Plaza, is a blend of park and cultural spaces meant for the public to enjoy.
