Housing starts are back on the rise, but the most recent surge is due to a growth in the multifamily market, according to the latest data from the U.S. Department of Housing and Urban Development and Census Bureau.
Image credit: sanremo-domains via Pixabay.com
Housing starts rose 13.2 percent in April over the previous month to a 1.07 million unit pace. The increase was largely attributed to the nearly 40 percent increase in multifamily housing starts last month—the sector’s fastest pace since January 2006. Single-family housing starts held mostly flat during the month, rising a modest 0.8 percent.
"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," says Kevin Kelly, chairman of the National Association of Home Builders. "However, demand for apartment construction still remains high."
The increase in multifamily units may be an indication of a rise in household formation.
"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," says NAHB Chief Economist David Crowe. "These young households will form the demand for ownership in the future."
Building permits – a way to gauge future building activity – increased 8 percent in April, again mostly due to the multifamily sector. Permits in April rose 21.8 percent for multifamily, while registering a 0.3 percent gain in single-family permits.