Rental Demand Spurs New Construction

October 19, 2011

Yesterday, Chicago Real Estate Forum shared some positive news about builder confidence in the market for newly built, single-family homes.

Today, the good news continues.

According to figures released by the Commerce Department on Wednesday, housing starts across the country increased 15 percent in September, the strongest pace of residential construction since April of 2010.

Bunch of golden house-shape keysWhile single-family housing starts rose only 1.7 percent last month, the surge came from the multifamily side, which skyrocketed 51.3 percent in September to its highest level since October of 2008.

“The big gain in multifamily housing production for September was in the wake of a below-trend number in August and in keeping with characteristic volatility in that sector,” said National Association of Home Builders Chief Economist David Crowe. “However, there’s no doubt that demand for apartments is rising as restrictive mortgage lending policies and concerns about future employment push consumers to pursue rental options.

“Single-family starts showed a slight uptick for the month, which was right in line with our forecast for the third quarter and in keeping with what builders have been telling us in recent surveys regarding the emergence of improving conditions in select local housing markets.”

All regions posted an increase in housing starts in September:

*Midwest: Rose 9.3 percent

*Northeast: Rose 12.7 percent

*South: Rose 15.7 percent

*West: Rose 18.1 percent

Keeping in line with the uneven housing recovery, however, the U.S. Commerce Department also reported that the issuance of building permits, which can predict future building activity, dropped 5 percent in September after a big gain in August.

Here, we’re holding tight, as the Midwest region posted a 0.9 percent increase in permit activity last month. The Northeast rose 4.9 percent, but the South and West fell 7 percent and 9 percent respectively.

Wonder what next month will bring.

Categories: Economy, New Homes

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[…] the good news continues on the Illinois and metro Chicago real estate scene with the Illinois Association of REALTORS latest report, which states that existing-home […]

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