Multifamily Leads Way in July Housing Starts

The Census Bureau’s data on July housing starts was especially favorable for the apartment sector. (Photo: Skidmore, Owings & Merrill LLP)

WASHINGTON, DC—New construction on apartments led the month-over-month and year-over-year increases in residential starts for July, according to Census Bureau and Department of Housing and Urban Development data released Tuesday. July’s jump in multifamily starts was nearly three times that of housing starts overall on a Y-O-Y basis, and nearly four times the increase overall from the previous month. The ratio increases when single-family starts are compared to starts on new apartment units. Single-family housing starts in July were at a seasonally adjusted annual rate of 770,000, an increase of 0.5% above the revised June figure of 766,000. With apartment starts at an annual rate of 433,000 for July, the monthly increase was 8.3%. On a Y-O-Y basis, the July tally represented a 1.3% increase in single-family construction and a 15.2% gain for multifamily. Multifamily also led the way for permitting in July, although a Y-O-Y comparison shows a decline for apartments amid an increase generally. The seasonally adjusted annual rate of 411,000 units was up 6.5% over June, but off 1.7% from the year-ago period. Separately, the National Association of Home Builders/Wells Fargo Housing Market Index showed a two-point increase in the index of builder confidence in the market for single-family homes. The August index stood at 60, compared to a downwardly revised 58 for July, NAHB said Monday. “Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” says Robert Dietz, chief economist at NAHB. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.” At IHS Global Insight, US economist Kristin Reynolds notes, “New homes for sale remain well below their long-term trend, and existing homes on the market continue to decline from year-earlier levels, limiting home purchase options. In combination with very low borrowing costs, we expect housing starts to continue to make progress during 2016.” Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What’s driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.