Freddie: Rental Housing Surges Past Homeownership Rates

Rising homebuilder confidence seen Tuesday coupled with news of a surge in multifamily housing development ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the sector typical for rental construction ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô reported Monday.

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Mortgage giant ""Freddie Mac"":http://www.freddiemac.com/ offered up the data and analysis in an October 2011 Economic and Housing Market Outlook, with the consensus that tenant-occupied properties are on track to continue outpacing homeownership rates.

New construction starts rose this year with a minimum 20 dwellings, down from the highest rates seen during the second quarter over the past two years, according to the outlook. Apartment rents entered an upward slope since stalling during the financial crisis.

The outlook noted an earlier ""Census Bureau"":http://www.census.gov/ study that found buyers shifting to rental housing by about 1.4 million on the whole, a 4-percent rise in tenant households over the course of a year.

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As homeownership rates fell to 65.9 percent this year from 66.9 percent last year, reflecting a 1.5-percent decline, owner rates hit 21.9 percent following a 4.4-percent downward shift for owners below 25 years.

Homeownership among owners between ages 25 and 29 fell to 34.7 percent, meanwhile, showing a 7-percent plunge.

Freddie noted a sharp plunge in 10-year Treasury yields to 1.98 percent over September, a rock-bottom rate recorded by the ""Federal Reserve"":http://www.federalreserve.gov/ since it started observing their declines in the 1950s. The GSE said that the yields likely helped encourage new, low rates for multifamily loans over the past months.

""New construction starts are slowly picking up and multifamily lending appears to be rising as well with this year's origination volume stronger than 2010's [sic],"" Frank Nothaft, VP and chief economist with Freddie, said in a ""statement"":http://freddiemac.mediaroom.com/index.php?s=12329&item=70575.

He attributed a balloon in originations to record-low mortgage rates, macroeconomic forces tugging apartment construction and rentals, and a pickup in activity among traditional lenders that stayed low during the financial crisis.

The hopeful news in multifamily construction follows an ""earlier study"":https://themreport.com/articles/nahb-homebuilders-more-confident-despite-outlook-2011-10-18 by the ""National Association of Home Builders"":http://www.nahb.org/, which recorded a four-point rise in homebuilder confidence, the highest since April last year.

The two reports contrast with a ""Fannie Mae"":http://www.fanniemae.com/portal/index.html outlook seen Monday that served up a ""50-percent chance"":https://themreport.com/articles/fannie-50-chance-us-economy-will-double-dip-by-2012-2011-10-17 for another U.S. recession by the end of 2012.