The housing market has finally received some good economic data after a few months of less than stellar news; Housing starts for the month of April increased 13% from the previous month. What’s interesting to note about this number is what is driving it.
It appears it is all about multi-family properties (e.g. townhomes, condos and apartment buildings) at the moment. The recent jump in housing starts was spurred by a 43% rise in multi-family properties which is defined as buildings with five or more units. On the other hand, single-family starts rose less than 1% from the month of March. Multi-family building permits increased from 400,000 to the highest it’s been since 2008, to 478,000.
The composition of housing starts isn’t surprising considering home ownership rates are still low and credit for first-time home buyers remains hard to obtain. Peter Boockvar, an analyst with the Lindsey Group, commented, “Bottom line, with the home ownership rate down to 64.8 percent versus the 2004 peak of 69.2 percent, and the 50-year average of 65.4 percent, the trend to renting is obvious for a variety of reasons we all know.”
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