Multifamily Surge Pushes New Construction Starts Over 1 Million Mark
A huge boost in multifamily apartment construction has helped push nationwide housing starts above the 1 million-unit mark, according to recently released data from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.
A May 16 press release from the National Association of Home Builders (NAHB) revealed total housing production rose 13.2 percent for the month of April to a seasonally adjusted annual rate of 1.07 million units. Thanks to a 39.6 percent increase on the multifamily side, the annual rate was edged beyond the 1 million mark, hitting an important market milestone.
As for single-family construction, the figures remain steady. While it’s not necessarily good news, it’s certainly not bad. As long as the numbers are holding fast and aren’t dropping, builders still have reason to remain hopeful. However, other conditions in the mortgage and real estate markets have some industry professionals worried.
“The flat single-family data confirm our latest surveys, which show that single-family builders remain concerned that tight credit availability and uncertain economic conditions are keeping potential buyers on the sidelines,” said Kevin Kelly, chairman of the NAHB and a home builder and developer from Wilmington, Del. “However, demand for apartment construction still remains high.”
According to the NAHB, single-family housing starts rose 0.8 percent to a seasonally adjusted annual rate of 649,000 units in April. This slight increase is a step in the right direction, but it pales in comparison to the 39.6 percent jump in multifamily production, bringing the seasonally adjusted annual rate to 423,000 units – their fastes pace since January 2006.
Even though the single-family market isn’t on fire, the increase in multifamily housing means demand for homeownership is likely to get stronger after a few years.
“The growth in multifamily production is a very positive development as it shows an expected increase in household formations from young people renting apartments and taking the first step into the housing market,” said NAHB Chief Economist David Crowe. “These young households will form the demand for ownership in the future.”
On a regional scale, the Midwest came out way ahead with a 42.1 percent gain. The Northeast posted a 28.7 percent increase, the West posted an 11.1 percent gain and the South registered a 1.5 percent gain.
The issuance of building permits, which can be an indicator of future building activity, increased 8 percent to a seasonally adjusted annual rate of 1.08 million units in April. According to the NAHB press release, this was due entirely to an increase in the multifamily sector, where permits registered a 21.8 percent increase to 453,000 units. By contrast, single-family permits registered a 0.3 percent gain to 602,000 units.
Check out more housing news stories from eLEND…
- New Home Sales Rise 6.4 Percent in April
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