In the 40 years prior to last decade’s housing bust, 71 percent of new home construction was of single-family properties. Since then, the share has dropped to 67 percent, a swing a 3.1 million homes.
HomeUnion reports that apartment construction is expected to peak this year. Though total permits and completions are up, housing starts are down on both a monthly and yearly basis. The thinking is that demand for new multifamily units has failed to keep pace with supply.
As the economy moves into a period of prosperity and interest rates begin to rise, a sufficient runway for builders to correct this imbalance during the current cycle unlikely exists. A sizable price gap exists between new and existing homes, and most new homes that are affordable for first-time buyers are located in distant suburbs.
PB Topical Ref
