The housing construction numbers in September provided a glimmer of hope at an impending recovery for the single-family housing market. But don’t be deceived. Multifamily still reigns supreme according to the latest data from the U.S. Commerce Department.
While single-family construction enjoyed an 11 percent bump in production in September, multifamily hit a home run with a 25 percent increase in new starts. And permits issued in September echoed the same good fortune for multifamily.
Multifamily permits were up 20.3 percent to 349,000, the highest level since July 2008. This overshadowed the 6.7 percent increase in seasonally adjusted annual rate by single-family homes. According to David Crowe, chief economist for the National Association of Home Builders, builder confidence is up, but the housing market still has a long road ahead.
“We are now almost at the halfway mark in terms of what would be considered a normal amount of new-home construction in a healthy economy, and we need to see consistent improvement like this over an extended period to get back to where the market should be in terms of generating jobs and economic growth," said Crowe in a statement.
Multifamily, on the other hand, is enjoying a much less stressful outlook, and continues to be a highly undersupplied sector. Next year, it's estimated that about 130,000 new multifamily units will hit the market. Yet, for the industry to keep up with rising demand and all the units lost to obsolescence, many economists say that we need to create about 300,000 units per year.
