The multifamily sector is witnessing a strong rebound as the single-family building sector struggles to move at all, the latest Freddie Mac Economic and Housing Market Outlook report said.  

Construction of buildings with at least five apartments hit the highest monthly construction pace since the beginning of 2006.

In addition, over the past four quarters, all the growth in net household formation has been among renters.

This can also be seen in the latest numbers from the U.S. Census Bureau and the Department of Housing and Urban Development.

Almost all of the recent increase in housing permits was due to multifamily unit construction, which soared by 73,000 to 382,000, a 24% increase, while single-family residential permits were up by just 6,000, or less than 1%.

"The apartment market has been vibrant, reflecting the desire of many millennials to live in an urban setting and retain locational flexibility,” Frank Nothaft, Freddie Mac vice president and chief economist, said.

The decline in homeownership rates has been primarily concentrated among younger households, with the homeownership rate of those 35 years and younger falling from 43.6% to 35.9% over the past decade, the Freddie report said.

“Unfortunately, if millennials are looking to live in the larger cities, that's where rents are rising the fastest, especially in the West or Northeast regions of the United States, places like Los Angeles and New York City. In the South region, areas like Miami and the Washington-Baltimore metro have seen real rents exceed the U.S. average. But in the Midwest, only the Chicago metro area has outstripped the U.S. average," Nothaft said.