• While all eyes were on the Fed’s second rate cut in as many months, this week’s housing market data indicates the recent easing of monetary policy, coupled with a multimonth decline in mortgage rates, may be spurring new housing construction, particularly within the commercial real estate (CRE) market.
  • Housing starts, which measure new homes currently under construction, rose approximately 12% in August compared to expectations for 5% growth.1 The strong headline number was driven primarily by activity within the multifamily CRE market, where starts jumped 33% in August. 1
  • Building permits, which track plans for new construction activity, rose nearly 8% in August, beating economists’ expectations of a decline of 1.3%.1 Again, permits issued for new multifamily CRE construction, which rose 13% from July, primarily drove permit activity.1
  • Housing data can be very volatile, and it’s important to keep in mind that short-term gains within the housing market can quickly reverse themselves. However, the uptick in multifamily construction activity, combined with other factors such as a low national vacancy rate, steady rent growth and a likely lower-for-longer rate environment, point to a fundamental backdrop that should support the sector moving forward.

1 Bloomberg Finance, L.P., as of September 19, 2019.

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