Back to View all
Chart of the week

Commercial real estate drives August housing activity

Is the easing of monetary policy spurring new housing construction? This week’s chart explores the connection and its potential impact on real estate investment.

September 20, 2019 | 2 minute read
  • 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.

  • 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.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.

Print this page Email this page

Related Insights

Chart of the week

Alternative lenders fill a growing CRE lending void

As CRE deal volume shows signs of thawing, alternative lenders sit in an excellent position to capture attractive income opportunities.

Chart of the week

As CRE supply pressures ease, is optimism ahead?

New commercial real estate deliveries are set to plunge in 2025 and beyond, setting the stage for a improved sentiment in the near term.

Chart of the week

CRE investors see an improved market, but prices to lag

Sentiment has improved across the CRE market, as this week’s chart shows. But investors feel better about broad market conditions than asset prices.

Search our site