• 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.


The chart of the week and any accompanying data is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The chart of the week is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such market commentary. The chart of the week should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the chart of the week or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.