SOURCE: Freddie Mac

Freddie Mac

September 15, 2014 10:05 ET

Freddie Mac September 2014 U.S. Economic and Housing Market Outlook

Multifamily on the Move

MCLEAN, VA--(Marketwired - Sep 15, 2014) - Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for September, showing that while the single-family building sector is slowly chugging along, the multifamily sector, especially apartment buildings for rent, continue its strong rebound. A video preview, along with the complete September 2014 U.S. Economic and Housing Market Outlook and forecast table, is available here.

Outlook Highlights

  • Construction of buildings with at least five apartments hit the highest monthly construction pace since the beginning of 2006.
  • One big difference in the development mix today compared with 2006 is the scant construction of condominium complexes.
  • The latest absorption rates for unsubsidized, unfurnished newly built apartments have been at the fastest pace in a decade: The Census Bureau reported that the latest 3-month and 6-month absorption rates had risen to 64 percent and 83 percent, respectively. Thus, demand is there to absorb the new supply.
  • Over the past four quarters all the growth in net household formations has been among renters. The decline in homeownership rates has been primarily concentrated among younger households. For example, for those 35 years and younger, their homeownership rate has fallen from 43.6 percent to 35.9 percent over the past decade.
  • The increased number of tenant households has pushed vacancy rates down to the lowest level since 2000, and on average, inflation-adjusted rents in the U.S. have returned to their prior peak levels of 14 years ago.

Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.

"The apartment market has been vibrant, reflecting the desire of many Millennials to live in an urban setting and retain locational flexibility. Unfortunately, if they're looking to live in the larger cities, that's where rents are rising the fastest, especially in the West or Northeast regions of the United States, places like Los Angeles and New York City. In the South region, areas like Miami and the Washington-Baltimore metro have seen real rents exceed the U.S. average. But in the Midwest, only the Chicago metro area has outstripped the U.S. average."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.