The slump in single-family mortgage originations last year helped to revive the multifamily market, which accounted for 22% of all new units built.

With people no longer being drawn into home purchases by low rates, demand was stronger for rentals.

In 1992, just as the mortgage boom was beginning, multifamily projects provided only one in six new dwellings, the lowest ratio in 30 years. This year the multifamily expansion is continuing, with builders of projects pulling construction permits for a quarter of the housing units nationwide.

In 1994, construction of multifamily units climbed more than 40% from the 1993 level, and the strength has carried well into 1995 despite continuing economic problems in the Northeast and California, according to U.S. Housing Markets, published by Lomas Mortgage USA.

"Some of the fuel for the current multifamily building boom has come from Wall Street - from real estate investment funds," said Robert R. Denton, executive vice president of Lomas Financial Group. "The funds' thirst for good apartment properties drove the prices of existing rental projects up to a level that made construction of new units more feasible."

Federal tax credits have also helped stimulate the multifamily market, Mr. Denton said. Some $400 million of credits were granted last year to developers of lower-income housing. He said the availability of such credits added a new factor to the equation in evaluating the feasibility of construction projects.

Lomas noted that much of the rental demand from low-income and lower- middle income groups was being met by units subsidized by the tax credits.

At the other extreme, some developers are aiming at more-affluent households, often aiming for conversion to condos later on. This has meant a limited supply of midrange apartments in some areas, the publication noted.

Atlanta has been one of the hotter markets for multifamily. After a construction binge involving more than 14,000 units in 1988, the market endured a protracted slump that saw only 1,300 units completed in 1993. Permits for 8,000 units were issued last year, and the rate is far above that so far this year.

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