WASHINGTON - U.S. builders
broke ground on apartment complexes last month at the fastest
pace in nearly 28 years, as developers anticipate that recent
jobs gains will launch a wave of renters.
The Commerce Department
said Friday that housing starts in June climbed 9.8 percent to a
seasonally adjusted annual rate of 1.17 million homes. All of
that growth came from a 28.6 percent surge in multifamily
housing that put apartment construction at its highest rate
since November 1987. Starts for single-family houses slipped 0.9
percent last month.
The gains show that what
had been a sluggish construction sector is now running on
economic adrenaline. Strong job growth and a rebounding economy
have increased the numbers of buyers and renters searching for
homes, while gradually rising mortgage rates have spurred
homeowners to finalize deals.
"The residential market
recovery is here, and it is strong and sustainable," said Peter
Ciganik, managing director at real estate investor GTIS
Housing starts jumped
35.3 percent in the Northeast because of apartments, while
climbing 13.5 percent in the South. Home construction slumped in
the Midwest and West in June.
starts have risen 10.9 percent year-to-date.
Over the past 12 months,
employers have added 2.9 million jobs, meaning that there are
that many more people with paychecks to spend across the broader
economy. The impact of those job gains and the unemployment rate
dropping to 5.3 percent has surfaced in housing, where demand is
outpacing the supply of homes and creating more pressure to
build houses and apartments.
The market for new homes
for sale had just 4.5 months of supply in May, compared to 6
months in a healthy market.
But the financial
distress has also left more Americans renting instead of owning,
creating more need for apartments. The share of Americans owning
homes has fallen so far this year to a seasonally adjusted 63.8
percent, the lowest level since 1989.
Approved building permits
rose increased 7.4 percent to an annual rate of 1.34 million in
June, the highest level since July 2007. The bulk of that
increase came for apartment complexes, while permits for houses
last month rose just 0.9 percent.
There are other signs
that builders are increasingly optimistic.
The National Association
of Home Builders/Wells Fargo builder sentiment index released
Thursday climbed to 60 this month, a level last reached in
November 2005 - shortly before the housing boom gave way to the
mortgage crisis that triggered the Great Recession. Readings
above 50 indicate more builders view sales conditions as good
rather than poor.
Mortgage rates have
started to rise, although they remain low by historic standards.
The average 30-year,
fixed mortgage rate was 4.09 percent last week, according to the
mortgage firm Freddie Mac. That is up from a 52-week low of 3.59