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
| Sep 5, 2012
Pagano joins Thornton Tomasetti as Vice President in Newark office
Pagano is a Certified Energy Planner and Certified Energy Manager through the Association of Energy Engineers.
| Aug 30, 2012
John S Clark Co. completes teaching lab at UNC Wilmington
Three-story building provides offices, classrooms, and labs.
| Aug 29, 2012
BOND completes South Cove Community Health Center
$11 million, 21,000 square foot community health center opens in Quincy, Mass.
| Aug 29, 2012
Mamayek joins HDR as Design Principal in Boston
He will work closely with the Executive Committee and business group leaders to expand and promote HDR’s Design Excellence initiatives in the Northeast region.
| Aug 28, 2012
McCarthy begins construction on transportation center at Bob Hope Airport
Designed to meet LEED silver certification standards, the facility will feature unique, above ground base isolators that will resist a maximum credible earthquake.
| Aug 28, 2012
Wisnewski Blair & Associates changes name to HGA Mid-Atlantic
New name reflects firm's growing design resources on East Coast.
| Aug 24, 2012
Meis heads to Woods Bagot Sport
Staples Center, Paul Brown Stadium architect to leverage global studio to serve clients worldwide.
| Aug 21, 2012
Under 40 Leadership Summit slated for October 3-5 in Chicago
Attendees will be given an exclusive technical tour of Wrigley Field, led by Steven J. Jacobsen, CDP, who has been retained by the Chicago Cubs to create the business plan and high-level concepts to evaluate the feasibility of various renovation options for this iconic sports venue; and Carl Rice, Cubs’ Vice President, Baseball Operations.
| Aug 21, 2012
Hong Kong’s first LEED Platinum pre-certified building opens
Environmentally-sensitive features have been incorporated, including reduced operational CO2 emissions, and providing occupiers with more choice in creating a suitable working environment.
