Apartment construction continues to steam along, but it is set to decline despite a continued demand for more units in cities across the US. From the Wall Street Journal:
Overall U.S. housing starts declined for the fourth time in five months in July, the Commerce Department reported Wednesday. Total housing starts decreased 4.8% from the previous month to a seasonally adjusted annual rate of 1.155 million.
While starts edged 0.5% lower for single-family construction, they plummeted 17.1% for construction on buildings with five or more units. Apartment construction is tapering off because of an oversupply of units, especially at the top end of the market that is causing rents to flatten in many major cities.
“I’m optimistic that single-family will catch up,“ Mr. McLaughlin said. ”It’s not going to happen this year and it’s probably not going to happen next year.”
There are immediate consequences to a pullback in multifamily buildings if single-family doesn’t immediately catch up. It could exacerbate a shortage of homes. While there is a surplus of luxury apartments in most major metropolitan areas, housing overall remains scarce.
A question not addressed in the article: where are all the construction workers going to come from to build those single family homes?