A 30% increase in multifamily housing activity helped total residential construction starts in the U.S. to increase 8% in July from June, according to a Dodge Data & Analytics report.
The growth took place after three straight declines in the past three months. The report also aligned with a result of a Freddie Mac survey. It showed optimism for the multifamily sector in the near future, including section 8 rental investments.
The amount of residential construction in July reached an annual rate of $301.1 billion, while the overall value of construction starts nationwide increased 8% to a seasonally adjusted annual rate of $728.1 billion. Demand for single-family homes, however, seemed stagnant due to neutral growth, according to the report.
Nine multifamily projects helped uplift the value of construction starts. These projects amounted to $100 million or more, led by those in Illinois, New York and Hawaii. In terms of the dollar value of multifamily starts, New York City ranked as the top metropolitan area. Chicago, Los Angeles, Boston and Atlanta completed the top five.
A Freddie Mac survey showed that a majority of the U.S. multifamily industry is confident about the growth prospects for the rental housing market. Over the next three to five years, 60% of respondents expect a continual growth.
However, the survey’s participants have a negative outlook on the affordable housing, with 42% expecting it to become worse than 2016. Land and construction costs, among other expenses, served as the top challenge for the sector, according to 40% of respondents. Still, the survey indicated a general agreement on growth expectations for the multifamily business due to growing demand, according to David Brickman, executive vice president of Freddie Mac Multifamily.
Despite a dim outlook on affordable housing, the U.S. multifamily industry may be on track for stable growth amid high business confidence.