“We will take what economic activity we can get, but our housing market model was designed in the U.S. to build a lot of single-family homes for owners, not multifamily homes for renters," says Diane Swonk commenting on yesterday's big jump in housing starts.
A big share of the gain came from multifamily starts - typically a volatile number - but a rolling 12-month total shows apartment construction at its highest level in 25 years. Single-family housing has a bigger multiplier effect for both consumer spending and employment, says Swonk.
As for apartment owners, a separate report showed rents up 3.3% Y/Y, their fastest pace of increase in five years. It's little mystery why the stocks of companies like Equity Residential (NYSE:EQR) and AvalonBay (NYSE:AVB) are at all-time highs, but their owners may want to mull the fast pace of building.