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
| Dec 18, 2013
How small architectural firms can make big money
What separates the great-but-struggling designers from the great-successful ones isn't luck. If you're as good an architect as you think, it will take more than your awesome design skills to become successful. Learn how to manage your firm’s finances and go from floundering to flourishing.
| Dec 18, 2013
Eskew + Dumez + Ripple receives AIA's 2014 Architecture Firm Award
The American Institute of Architects (AIA) Board of Directors has voted for Eskew + Dumez + Ripple to receive the 2014 AIA Architecture Firm Award. The firm will be honored at the 2014 AIA National Convention in Chicago. The Board also voted to posthumously honor Julia Morgan, FAIA, with its 214 Gold Medal.
| Dec 18, 2013
Architecture Billings Index takes step back in November
After six months of steadily increasing demand for design services, the Architecture Billings Index paused in November, dipping below 50 for just the second time in 2013.
| Dec 17, 2013
Kahn appoints Alan Cobb President and CEO
Cobb is the tenth president in the firm’s 118-year history. As President, Cobb is responsible for ensuring that all of the firm’s client issues are effectively address and that overall project team performance meets or exceeds client expectations for each and job the firm undertakes.
| Dec 17, 2013
CBRE's Chris Bodnar and Lee Asher named Healthcare Real Estate Executives of the Year
CBRE Group, Inc. announced today that two of its senior executives, Chris Bodnar and Lee Asher, have been named Healthcare Real Estate Executives of the Year by Healthcare Real Estate Insights.
| Dec 16, 2013
Is the metal building industry in a technology shift?
Automation is the future you can’t avoid, though you may try. Even within the metal building industry—which is made up of skilled tradesmen—automation has revolutionized, and will continue revolutionizing, how we work.
| Dec 16, 2013
Why employees don’t trust their leaders
Trust, one of the key elements to productive business relationships, is in short supply these days. An Associated Press-GfK poll discovered that only one-third of Americans say most people can be trusted and nearly two-thirds says “you can’t be too careful” in dealing with people.
| Dec 16, 2013
Construction materials prices remain stable in November
Overall, construction materials prices fell 0.5 percent in November and are up only 1.1 percent year over year, according to the Department of Labor’s Dec. 13 Producer Price Index.
| Dec 16, 2013
Helene Combs Dreiling, FAIA, inaugurated 2014 AIA President
Helene Combs Dreiling, FAIA, executive director of the Virginia Center for Architecture, was inaugurated as the 90th president of the American Institute of Architects (AIA) during ceremonies held on December 12th at the Andrew W. Mellon Auditorium. She succeeds Mickey Jacob, FAIA, in representing nearly 83,000 AIA members.
| Dec 13, 2013
GRW acquires West Virginia design firm Chapman Technical Group
GRW is expanding its capabilities through the recent acquisition of Chapman Technical Group, a 36-person West Virginia-based firm.