Building permits for single-family and multi-family construction surged to an eight-year high in June, signaling a pick up in home building is on the horizon, the Commerce Department reports.
Permits for future home construction rose 7.4 percent to a 1.34 million unit pace in June, the highest level since June 2007. All four regions of the U.S. – Northeast, Midwest, South and West- reported gains in housing permits.
Multi-family permits posted the largest increase at 15.3 percent in June, while permits for buildings with five units or more increased to the highest level since January 1990. Permits for single-family home building also rose, increasing 0.9 percent last month.
Economist point to a rise in household formation and an improving labor market that is prompting more young adults to leave their parents’ home and spark a rise in demand for housing, notably apartments.
A rise in multi-family production helped push housing starts 9.8 percent higher in June month-over-month, reaching a seasonally adjusted annual rate of 1.17 million units, according to the Commerce Department. Multifamily production surged 29.4 percent last month, reaching a seasonally adjusted annual rate of 489,000 units.
“The multi-family gains this month are encouraging and show that the millennial generation continues to be drawn to the rental market,” says Tom Woods, chairman at the National Association of Home Builders.