Multifamily Construction is Making a Comeback
After months of new single-family construction leading the way, November’s construction starts were boosted primarily by multifamily construction. In November, construction starts were 13% higher compared to last year and increased by 1.2% from October of this year. Building permits also hit their highest pace in 14 years, according to Realtor.com. A recent uptick in construction starts for multifamily projects, such as apartments and condos, leaped 8% while single-family starts were up 0.4%. Permits issued for buildings with five or more units increased almost 23% from October to November as well.
New-home construction activity didn’t grow evenly across all parts of the country. Housing starts surged roughly 59% in the Northeast, driven by the multifamily boom, but fell nearly 5% in the Midwest and 6% in the South. The Midwest and South both experience slowdowns in new construction of single-family homes.
The big picture: America’s building boom is continuing for now — and that’s good news for prospective home buyers. The severe shortage of existing homes for sale has pushed prices higher. As a result, the new-home segment of the market holds renewed importance.
“New home construction stands out as a clear solution to the rising challenge of affordability especially as housing demand is expected to continue to grow,” said Realtor.com senior economists George Ratiu. “However, without a significant supply of new construction, many would-be buyers will be forced to sit on the sideline due to record-high home prices.”