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Multifamily Surge Drives Housing Data

Thursday, October 22, 2015

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U.S. builders broke ground on more residential projects last month than they have in nearly eight years, new government data suggests.

The U.S. Commerce Department reported Tuesday (Oct. 20) that construction of new homes increased 6.5 percent to a seasonally adjusted annual pace of 1.21 million units in September.

Meanwhile, applications for building permits—a sign of future construction—dipped 5 percent to 1.10 million in September.

ground breaking
©iStock.com / Jason Doiy

New-home construction accelerated in September, led by the apartment homebuilding sector.

“Although our builders are gaining confidence in the housing market, they remain cautious about adding too much inventory,” said Tom Woods, chairman of the National Association of Home Builders.

Starts were up 17.5 above the September 2014 rate and permits were up 4.7 percent over last year’s rate of 1.05 million units, the Commerce Department said.

Sector Surges

While both single-family and multifamily housing sectors registered gains in September, it was multifamily that saw the most growth.

Starts for the multifamily sector rose 17 percent to a 454,000 unit rate.

Single-family starts rose 0.3 percent to a 740,000 unit pace.

multifamily housing
©iStock.com / Peter de Kievith

Starts for the multifamily housing sector rose 17 percent to a 454,000 unit rate.

The momentum may not continue, however.

Multifamily permits registered a 14.6 percent drop to 369,000 units and permits for single-family residences decreased 0.3 percent from August.

By Region

Housing starts rose in three of the four regions last month.

The Northeast, South and West posted gains of 23.4 percent, 0.6 percent and 25.4 percent, respectively.

Meanwhile, the Midwest registered a 12.2 percent decline in starts.

Confidence Remains Steady

In a separate report released Monday (Oct. 19), the NAHB noted that builder confidence in the market for newly constructed single-family homes rose three points in October.

Builder confidence reached a level of 64 on the NAHB/Wells Fargo Housing Market Index (HMI), a return to figures seen at the end of the housing boom in late 2005.

David Crowe
NAHB

"...[O]ur industry is strengthening at a gradual but consistent pace," according to NAHB Chief Economist David Crowe.

“With October’s three-point uptick, builder confidence has been holding steady or increasing for five straight months. This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” said NAHB Chief Economist David Crowe.

“With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015.”

   

Tagged categories: Condominiums/High-Rise Residential; Construction; Home builders; Housing; Housing starts; National Association of Home Builders (NAHB); Residential Construction

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