Building permits for single-family and multifamily construction surged to an eight-year high in June, signaling a pick up in homebuilding is on the horizon, the Commerce Department reports.
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Permits for future home construction rose 7.4 percent to a 1.34 million unit pace in June, the highest level since June 2007. All four regions of the U.S. – Northeast, Midwest, South, and West – reported gains in housing permits.
Multifamily permits posted the largest increase at 15.3 percent in June, while permits for buildings with five units or more increased to the highest level since January 1990. Permits for single-family homebuilding also rose, increasing 0.9 percent last month.
Economists point to a rise in household formation and an improving labor market that is prompting more young adults to leave their parents’ homes and spark a rise in demand for housing, notably apartments.
A rise in multifamily production helped push housing starts 9.8 percent higher in June month-over-month, reaching a seasonally adjusted annual rate of 1.17 million units, according to the Commerce Department. Multifamily production surged 29.4 percent last month, reaching a seasonally adjusted annual rate of 489,000 units, while single-family housing starts dropped 0.9 percent to 685,000 units.
“The multifamily gains this month are encouraging and show that the millennial generation continues to be drawn to the rental market,” says Tom Woods, chairman at the National Association of Home Builders.
Combined single- and multifamily starts rose by the largest amount in the Northeast, increasing 35.5 percent month-over-month, and by 13.5 percent in the South. The West posted a 6 percent decrease in housing starts and the Midwest a 0.7 percent loss.
