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
| Oct 31, 2013
74 years later, Frank Lloyd Wright structure built at Florida Southern College
The Lakeland, Fla., college adds to its collection of FLW buildings with the completion of the Usonian house, designed by the famed architect in 1939, but never built—until now.
| Oct 31, 2013
CBRE's bold experiment: 200-person office with no assigned desks [slideshow]
In an effort to reduce rent costs, real estate brokerage firm CBRE created its first completely "untethered" office in Los Angeles, where assigned desks and offices are replaced with flexible workspaces.
| Oct 30, 2013
15 stellar historic preservation, adaptive reuse, and renovation projects
The winners of the 2013 Reconstruction Awards showcase the best work of distinguished Building Teams, encompassing historic preservation, adaptive reuse, and renovations and additions.
| Oct 30, 2013
11 hot BIM/VDC topics for 2013
If you like to geek out on building information modeling and virtual design and construction, you should enjoy this overview of the top BIM/VDC topics.
| Oct 29, 2013
Increased backlogs, margins lead to renewed optimism in global construction
After prolonged economic uncertainty, a majority of executives in the global engineering and construction sector have fresh confidence in the growth prospects for the industry, according to KPMG International's 2013 Global Construction Survey. A general increase in backlogs and margins is giving cause for optimism across the industry, with further growth anticipated.
| Oct 29, 2013
BIG opens subterranean Danish National Maritime Museum [slideshow]
BIG (Bjarke Ingels Group) has completed the Danish National Maritime Museum in Helsingør. By marrying the crucial historic elements with an innovative concept of galleries and way-finding, BIG’s renovation scheme reflects Denmark's historical and contemporary role as one of the world's leading maritime nations.
| Oct 28, 2013
Urban growth doesn’t have to destroy nature—it can work with it
Our collective desire to live in cities has never been stronger. According to the World Health Organization, 60% of the world’s population will live in a city by 2030. As urban populations swell, what people demand from their cities is evolving.
| Oct 28, 2013
Metal roofs are topping more urban dwellings
Given their durability and ease of use, metal roofs have been a common feature on rural houses for decades. Now they’re becoming an increasingly popular choice on urban dwellings as well.
| Oct 25, 2013
Hoffmann Architects announces launch of U.S. Capitol Dome restoration
The Architect of the Capitol will undertake comprehensive restoration of the 150-year-old cast iron Dome, which has not undergone a complete restoration since 1959-1960.
| Oct 23, 2013
AIA: Crowd-funding shows promise for financing real estate projects
The American Institute of Architects issued a statement on the SEC's recent 5-0 vote to propose rules aimed at letting startups tap large numbers of ordinary investors for small amounts of capital.