The construction of new homes for the month of September rose 6.5 percent, an eight-year high, with 1.206 million units, according to a recent release by the National Home Builders Association (NHBA).
The increase is thanks to a rise in demand for multifamily homes, which rose 18.3 percent to 466,000. Demand for single-family homes remained nearly the same at 740,000. This is the first time housing starts have surpassed 1.2 million in eight years, since October 2007.
Compared to last year, both single-family and multifamily home construction have grown. Single-family starts have risen 11 percent from the same time period in 2014, and multifamily starts are up 13.8 percent.
“These averages provide a clearer picture of the steady increase in housing construction that we have been experiencing for several years,” said NAHB’s Chief Economist and Senior Vice President David Crowe.
Single-family construction starts had an average of 746,000 for the third quarter, and an increase of 5.7 percent from the second quarter this year. However, multifamily starts averaged 418,000 for the third quarter, a decrease of 7.3 percent from the second quarter.
“The trends in both are more apparent on a quarterly or year-to-date basis that smooths some of the monthly irregularities inevitable in sample data,” said Crowe.
While permits were down 5 percent, Crowe attributed that change due to the increase in multifamily home constructions. Single-family permits were similar to the second quarter at 697,000. Multifamily permits were down 12.1 percent to 406,000 annually. However, Crowe noted that multifamily permits had greatly increased in June as most builders strived to beat new regulatory deadlines, and builders are still working off those permits. Compared to 2014, single-family home permits are up 9.4 precent, and multifamily home permits have risen 18.8 percent.
“The smoothed trends tell the same story: single-family production continues to move forward at a modest pace as more current home owners feel comfortable selling their existing home and buying a new one. Younger, newly-formed households continue to move out of their parents or roommate living arrangements and rent an apartment driving up the demand for more rental units,” said Crowe, who noted NAHB expects the trend to remain consistent through 2016.