Slump in U.S. Housing Starts Led by Multifamily Units: Economy
Source: Bloomberg
By Jeanna Smialek Sep 18, 2014 12:47 PM ET
Housing starts slumped in August from the highest level in almost seven years, reflecting a setback in multifamily projects that are at the forefront of the rebound in U.S. real estate.
Beginning home construction fell 14.4 percent, the most since April 2013, to a 956,000 annualized rate following July’s revised 1.12 million pace that was the strongest since November 2007, the Commerce Department said today in Washington. Work on apartments and condominiums, which tends to be volatile, dropped 31.7 percent after jumping 44.9 percent in July.
As more Americans decide that homeownership isn’t for them because wage growth is slow and qualifying for mortgages remains difficult, builders have focused on putting up more rental units, which means the industry will see bigger swings month to month. The average number of multifamily units started over the past 12 months was the most since 2006.
“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,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York. The construction figures “will continue to improve, but it’s going to continue to be an erratic improvement.”
Read more: http://www.bloomberg.com/news/2014-09-18/housing-starts-drop-more-than-forecast-in-uneven-u-s-recovery.html
