August saw the first slump in housing in approximately seven years, a reflection of the setback in multifamily projects which had been the primary aid in US real estate recovery.
Home constructions fell 14.4 percent to a 956,000 annualized rate following a 1.12 million pace set in June. Construction on apartments and condominiums fell 31.7 percent, following a 44.9 percent increase in July. Ward McCarthy, chief financial economist at Jefferies LLC says,
There’s been a fairly compelling recovery in multifamily construction because people need apartments to live in; on the other hand, there’s been significantly less recovery in the single-family market… [figures] will continue to improve, but it’s going to continue to be an erratic improvement.”
More and more Americans are opting out of becoming home owners due to economic influences such as slow wage growth and strict mortgage regulations. For this reason, builders have turned to focus on rental units, for which the multifamily sector has experienced the most starts in the last 12 months since 2006.
On the other hand, single family homes have declined by 2.4 percent to a 643,000 rate in the last month, from the previous month’s average of 630,000. While marking progress in the housing market, the reading remains the weakest since 1982.
Read more here- “Sump in US Housing Starts Led by Multifamily: Economy,” (Jeanna Smialek, Bloomberg)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.