U.S. residential construction starts posted a 4% increase over May in June led by surprising multifamily growth despite slowly growing vacancy numbers.
According to Dodge & Data Analytics, this $323 billion boost in residential construction starts came from a number of abnormally large multifamily projects across the nation including the $213 million Aston Martin tower in Miami, the $195 million multifamily portion of the Essex Crossing mixed-use project in New York and the $186 million multifamily portion of a mixed-use tower in Boston. These large projects drove a 9% growth in multifamily starts in June and contributed to a 6% year-over-year increase for residential housing in general.
Single-family housing starts posted an increase of only 2% in June, hovering around the improved activity levels that emerged at the end of 2017, but lagging far behind multifamily’s rate of growth.
“Residential building is seeing surprising resilience from multifamily housing, even as apartment vacancy rates have moved up gradually,” Robert Murray, chief economist at Dodge Data & Analytics, said in a statement.
The top ten metros ranked by dollar amount in residential construction starts in the first half of the year are:
- New York
- Washington, D.C.
- San Francisco
- Los Angeles
- Dallas-Fort Worth
According to the report, the first half of 2018 showed this performance for single-family housing by region compared to last year: the West rose 11%; the South Atlantic grew 5%; the South Central, up by 4%; the Northeast coming in with a 2% increase; and the Midwest, up 1%.
“Although the construction industry is facing increased headwinds during 2018, namely higher material prices and rising interest rates, these have yet to have a discernible negative impact on the broad level of construction starts. On the plus side, the construction industry is benefitting currently from the tailwinds of a strong economy, some easing of bank lending standards, and greater funding for federal public works programs as the result of the omnibus appropriations legislation passed in March," Murray added.