The residential construction market has begun to stabilize recently after falling significantly over the past four years.  Housing starts reported by the U.S. Census Bureau have increased roughly 40% on a seasonally adjusted annual rate (SAAR) since hitting bottom in April 2009. 

A big reason for this recent increase in new residential construction has been from multi-family units, particularly apartment buildings.  Multi-family starts have become a bigger part overall starts.  Multi-family starts made up roughly 30% of all starts in 2011, up from about 20% of all stars in 2006-07.

One reason for this recent demand for multi-family structures was the consciousness of the consumer.  When things took a turn for the worse in 2008, consumer confidence - and the desire to purchase a home - fell along with it.  The recent demand for short-term, low-risk housing climbed, reaching a decade high in the fourth quarter.  

According to Reis Inc., U.S. apartment vacancies declined to a 10-year low, with the vacancy rate falling to 5.2%.  This is down from 5.6% in Q3 and 6.6% in Q4.  This recent demand for rental properties has helped increase the demand for new multi-family construction starts.

Another sign of the recent increase in apartment demand is The Market Tightness Index reported in the Quarterly Survey of Apartment Market Conditions by the National Multi Housing Council (NMHC).  The most recent Market Tightness Index rose to 60, up from 52 last month.  This is the eighth consecutive month above 50; any reading over 50 indicates tightening.  

As demand for new apartment buildings increase, so does the demand for materials that go into these new units, particularly steel.