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 11, 2010
'Flexible' building designed to physically respond to the environment
The ecoFLEX project, designed by a team from Shepley Bulfinch, has won a prestigious 2009 Unbuilt Architecture Design Award from the Boston Society of Architects. EcoFLEX features heat-sensitive assemblies composed of a series of bi-material strips. The assemblies’ form modulate with the temperature to create varying levels of shading and wind shielding, flexing when heated to block sunlight and contracting when cooled to allow breezes to pass through the screen.
| Aug 11, 2010
New book provides energy efficiency guidance for hotels
Recommendations on achieving 30% energy savings over minimum code requirements are contained in the newly published Advanced Energy Design Guide for Highway Lodging. The energy savings guidance for design of new hotels provides a first step toward achieving a net-zero-energy building.
| Aug 11, 2010
Perkins+Will master plans Vedanta University teaching hospital in India
Working together with the Anil Agarwal Foundation, Perkins+Will developed the master plan for the Medical Precinct of a new teaching hospital in a remote section of Puri, Orissa, India. The hospital is part of an ambitious plan to develop this rural area into a global center of education and healthcare that would be on par with Harvard, Stanford, and Oxford.
| Aug 11, 2010
Burt Hill, HOK top BD+C's ranking of the nation's 100 largest university design firms
A ranking of the Top 100 University Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
PBK, DLR Group among nation's largest K-12 school design firms, according to BD+C's Giants 300 report
A ranking of the Top 75 K-12 School Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Turner Building Cost Index dips nearly 4% in second quarter 2009
Turner Construction Company announced that the second quarter 2009 Turner Building Cost Index, which measures nonresidential building construction costs in the U.S., has decreased 3.35% from the first quarter 2009 and is 8.92% lower than its peak in the second quarter of 2008. The Turner Building Cost Index number for second quarter 2009 is 837.
