Permits to build new apartment buildings in the U.S. are surging as a bulging population of millennials fuels demand for rentals and low interest rates ease construction financing costs.

Authorizations for larger multifamily dwellings those with five or more units jumped to an average annualized pace of 501,000 in the three months through November, according to government data Tuesday, Dec. 17. That's the highest since July 2015. Prior to that year, which was a hot one for condos and apartments, it's the strongest since 1987.

The rental market is booming as young people leave dorm rooms and their parents' basements to strike out on their own. Baby boomers are also downsizing from single-family homes. At the same time, lower interest rates are making it easier for homebuilders who want to meet this demand for rental properties.

"Clearly, we're seeing some re-acceleration in multifamily," Robert Dietz, chief economist for the National Association of Home Builders, said by phone. "It's a bit of surprise."

There are 76 million people in the U.S. who have recently entered or will be entering the housing market, mostly as renters, according to the National Multifamily Housing Council. That suggests a lot of pent-up demand and a positive outlook for the sector.

The data indicate multifamily housing permits are set to buoy overall home building data in the fourth quarter and into 2020, as it takes between one to two months for permits to transition to starts. At the same time, high construction costs and a shortage of workers could create delays in commencing construction.

Originally posted here:
Apartment building permits soar to a four-year high amid rental boom - Crain's Cleveland Business

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December 19, 2019 at 2:42 am by Mr HomeBuilder
Category: Apartment Building Construction