"For quite a while the stocks were going nowhere, they were treading water, as people were worried about the looming new supply and wondering if there would be demand," said Calvin Schnure, vice president of research at NAREIT. "What we're seeing is, yes, there is new supply, but the demand is much stronger."

Multifamily construction reached an eight-year high in July, up nearly 50 percent from a year ago, according to the U.S. Census Bureau. Building permits for these apartment structures, an indicator of future construction, are 15 percent higher than a year ago.

"We are not worried about supply," said Alexander Goldfarb, a REIT analyst with Sandler O'Neill. "Right now we have homeownership rates depressed, as renters are still hesitant to move out to buy homes, and thus the demand for apartments continues to grow. Additionally, banks and lenders remain cautious on construction lending, and apartment developers are driven by economics. If they can't make the numbers pencil, they won't build."

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Household formation surged in the second quarter of this year, but it was largely rental households. This, as rents gained ever more steam. Rents grew by 3.8 percent in July, as compared with 3.4 percent growth in July of 2013, according to Axiometrics, a Texas-based market research firm. Weak job and wage growth is keeping landlords from raising rents more, even as vacancies fall.

"Effective rent growth has increased for five straight months, but is still a long way from the summer of 2011, when the rate was in the 5 percent range," said Stephanie McCleskey, vice president of research at Axiometrics. "On the other hand, it's becoming more and more likely that 2014 will be the strongest overall year for the apartment market since the recession ended. This is the year of the apartment."

But is it the year of the apartment stock? Clearly the gains in the first half of this year were monumental, and advances like that are not always sustainable long term, especially in real estate.

"Are REITs overvalued?" asked Goldfarb. "Look at interest rates and the 10-year [Treasury]. The Federal Reserve remains focused on wage inflation and homebuying, so we don't see them raising rates anytime in the near future. So, with limited supply and prolonged low rates, REITs continue to look good."

Read MoreUS mortgage volume ekes out gain on tiny drop in rates

The apartment sector was actually underbuilt, between 2008 and 2011, according to Schnure. It is now several million units behind demand. As job growth improves, more young people will move out of their parents' homes and out of roommate situations and rent on their own. Wage improvement will also allow landlords to raise rents even higher.

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Are apartment stocks overheated?

The charred, buckled remains of Royal Terrace Apartments on Arnett Boulevard are coming down.

Charles Fulcher, inspections supervisor with the city of Danville, said Marshall Construction has applied for a demolition permit. Before the building can be demolished, Fulcher said an asbestos crew will have to go in and check out the structure.

During the early morning hours of Aug. 16, the driver of a 2006 Chrysler Pacifica rammed into the building, causing a natural gas leak that led to an explosion and fire; 22 people lived in the apartment building.

After the crew has examined the structure, they will decide if asbestos needs to be removed, Fulcher noted. If so, the company will have to apply for a permit to remove the asbestos, he added.

"The building is going to have to come down, but beyond that we havent made any decisions," said Ron Thompson, owner of the apartment building.

There are a lot of steps that have to be completed before the building can be demolished, Thompson added. The utilities have to be cleared, Thompson continued. But first, he has to get everything worked out with the insurance company.

Thompson is in the process of working out the insurance details which is going fine, he added but those finite details havent been completed yet.

James T. Barksdale, 35, of Danville, is suspected of ramming the vehicle he was driving into the backside of one of the complexs buildings, according to police. According to witnesses at the scene, Barksdale tried to flee the scene on foot but was apprehended by police officers.

Firefighters realized the accident caused a natural gas leak and started evacuating residents as quickly as possible, Danville Assistant Chief Steve Dishman. A number of people had already begun evacuating themselves because the impact of Barksdales car hitting the building woke them up.

Initially, there was no fire when firefighters arrived, Dishman explained. Shortly after firefighters arrived, the gas found an ignition source, which caused a fire and explosion.

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Apartment complex rocked by explosion scheduled for demolition

The charred, buckled remains of Royal Terrace Apartments on Arnett Boulevard are coming down.

Charles Fulcher, inspections supervisor with the city of Danville, said Marshall Construction has applied for a demolition permit. Before the building can be demolished, Fulcher said an asbestos crew will have to go in and check out the structure.

During the early morning hours of Aug. 16, the driver of a 2006 Chrysler Pacifica rammed into the building, causing a natural gas leak that led to an explosion and fire; 22 people lived in the apartment building.

After the crew has examined the structure, they will decide if asbestos needs to be removed, Fulcher noted. If so, the company will have to apply for a permit to remove the asbestos, he added.

"The building is going to have to come down, but beyond that we havent made any decisions," said Ron Thompson, owner of the apartment building.

There are a lot of steps that have to be completed before the building can be demolished, Thompson added. The utilities have to be cleared, Thompson continued. But first, he has to get everything worked out with the insurance company.

Thompson is in the process of working out the insurance details which is going fine, he added but those finite details havent been completed yet.

James T. Barksdale, 35, of Danville, is suspected of ramming the vehicle he was driving into the backside of one of the complexs buildings, according to police. According to witnesses at the scene, Barksdale tried to flee the scene on foot but was apprehended by police officers.

Firefighters realized the accident caused a natural gas leak and started evacuating residents as quickly as possible, Danville Assistant Chief Steve Dishman. A number of people had already begun evacuating themselves because the impact of Barksdales car hitting the building woke them up.

Initially, there was no fire when firefighters arrived, Dishman explained. Shortly after firefighters arrived, the gas found an ignition source, which caused a fire and explosion.

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Danville apartment complex rocked by explosion scheduled for demolition

David Alligood found a good fit in a small apartment when he transferred to Pittsburgh to supervise 12 regional stores for Target.

I live in a one-bedroom unit at River Vue, which is ideal for the amount of traveling I must do, said Alligood, 32, who wants to stay in the city where he has joined civic groups, runs in several races and enjoys the sports scene.

The North Carolina transplant fits into a trend that is driving an apartment building boom. According to data from the Census Bureau, builders nationwide broke ground on more apartment buildings during the past year than in any similar period since 1989. Higher home prices and mortgage rates are pushing young adults to rent instead.

In Pittsburgh, construction of apartments cooled off during the first six months of the year. New permits dropped by 50 percent from 2013, partly because of the severe winter, according to Ross-based research and consulting firm Tall Timber Group.

But demand from the key demographic young adults remains high, developers say. Investors, especially from out of town, are putting money into converting and upgrading apartments here to capture their business. The competition among young adults who see apartment living as a more affordable and flexible option than buying a home is pushing prices higher.

Landlords are not providing rent concessions. Rental rates are increasing 3 to 5 percent annually compared to 2 percent in the past. There has been high-paying job growth here, partially because of Marcellus shale, resulting in high rental rates a lot of newcomers to this region can afford, said Cindy Kamin, a commercial real estate broker with CBRE.

The increasing number of young professionals making Pittsburgh home are doing so in newer, trendy apartments that fit into their lifestyle, and developers are quickly looking to cater to that growing demographic. Oxford Development Co. has two projects under way, primarily aimed at renters age 25 to 34, said Shawn Fox director of development.

About 60 percent of the units are either studios or one-bedrooms because traditionally, these tenants do not spend a lot of time in their apartments, said Chuck Hammel of Pitt-Ohio Trucking, a partner with Oxford in the $60 million, 300-unit Three Crossings development set to open next spring in the Strip District.

Oxford's other development is the 117-unit Hot Metal Flats, a $24 million to $26 million development, set to open next spring in the South Side.

That 25-to-34 crowd is less interested in buying homes as they come out of school with heavy debt, fearful of a big mortgage, Kamin said. Some have not started their own families and don't view owning a house as a necessity.

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Young adults drive home rental trend in Western Pennsylvania

Demolition has been taking place on a former Park Ridge office building as plans move forward on a new luxury apartment complex.

Residential development firm Trammel Crow Company announced that the three-story, 115-unit apartment building proposed for 205 W. Touhy Ave. will be known as Park 205, with construction to begin within the last quarter of the year. Total completion is slated for late 2015.

The 3.6-acre site is next to Whole Foods and was formerly occupied by Advocate Health Care offices. Demolition crews began dismantling the building this month.

According to Trammel Crow, Park 205 will be the first LEED (Leadership in Energy and Environmental Design) certified multi-family building built in Park Ridge. Buildings can qualify for LEED certification based on how they use environmentally-friendly construction strategies.

Apartment units will consist of one, two or three bedrooms, with amenities that include a pool, sun deck, outdoor fire pits, cabanas, club room, fitness center, Wi-Fi coffee lounge, business center, dog spa, bicycle storage and heated parking.

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Construction begins on 115-unit Park Ridge apartment building

Standing amid scaffolding and building materials at the AQ Rittenhouse apartment and retail project in Center City on Wednesday, Stephen Pouppirt, president of Clemens Construction Co. Inc., almost couldn't keep count of all the major projects his company is handling this summer.

"A lot of projects," he said, "Maybe 20, four major ones, and we have many in the queue."

Pouppirt's contracts, including several in Center City, are part of what is ranking the Philadelphia metropolitan division third nationally in the number of construction jobs added in a year, according to a trade group's analysis of Labor Department numbers.

Philadelphia, along with Bucks, Chester, Delaware and Montgomery Counties, has added 8,500 construction jobs from July to July. Only Houston and Dallas have added more.

For example, Pouppirt's company will employ, at peak, 100 to 120 building trade workers at the AQ Rittenhouse Apartment project being developed by Aquinas Realty Partners of Havertown. The project, a 12-story building at 2021 Chestnut St., includes 110 apartments and street-level retail.

Philadelphia's deputy mayor for economic development, Alan Greenberger, said that the young-adult generation's desire to live in the city is fueling growth - both in residential and in commercial development as businesses "are locating here to be near talent."

The picture wasn't as pretty in September 2008.

"The fall of 2008 was like falling off a cliff," Pouppirt recalled.

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Phila. third in U.S. in new construction jobs

When Warren Madden was a student at Iowa State in the 1950s, Campustown was lined with sharply dressed students meandering along Lincoln Way exploring small local businesses, grocery stores, drug stores and suit and dress shops.

In the past 60 years, businesses have come and gone in Campustown, and Madden, senior vice president for business and finance, said the fluctuating economy and changes in university size and demographic are top factors.

Today, the Ames community is watching Campustown take on redevelopment. The area along Lincoln Way from Welch Avenue to Stanton Avenue is a sight of muddy holes in the ground beneath a looming crane that is preparing to lay the foundation of projects by Kingland Systems, Gilbane, Inc., The Opus Group and Randall Corporation.

Maddens student experience with Campustown is different than what a student might expect today. For instance, alcohol was nowhere to be found in Campustown and a few bars were located in downtown Ames, according to Madden.

Madden also said that student attire has also changed dramatically, affecting the shops in Campustown.

Students dont walk around in coats and ties and suits, Madden said. Women dont wear dresses the same way they used to. When I was a student at Iowa State, women wore skirts to class.

Changes in student commodity desires have attracted more stores such as chain restaurants, tattoo parlors, tanning salons and now more student housing, replacing smaller local shops throughout the years. Much of this, Madden said, was driven by the marketplace and the student enrollment increase at Iowa State.

The enrollment increase has attracted new business prospects looking into building in Campustown.

The student growth at Iowa State has built a need for additional houses, and the students become customers for businesses, Madden said.

Some of the housing project designs show six-story buildings, Madden said, with the top five stories housing students and the bottom floor hosting commercial and retail businesses.

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Under construction: Madden reflects on Campustowns shift

If you live in a major U.S. city and look out over the skyline, chances are good youll see construction cranes. Lots of them. Only twice in the past 25 years have new apartment buildings been going up as fast as they are right now. Thats not necessarily a good omen. The first time, in February 2000, was right before the dot-com bubble burst. The second time, January 2006, came right before the housing bubble burst. Now we learn that builders broke groundon 423,000 new multifamily units inJuly, right before who knows what?

Monthly building data released earlier this week by the Census Bureau and the Department of Housing and Urban Development showed that new home construction overall posted strong gains in July, with the highest number of new home starts in eight months. The comeback largely manifested in an uptick in apartment buildings with five or more units, which saw an almost 50 percent increase in new starts in July over a year earlier. By comparison, starts on single-family homes were up only about 10 percent over the same period.

Thats part of the reason that the Northeast, with its large, dense cities, saw the biggest monthly increase, up 44 percent from June. That matches the analysis byTrulia (TRLA) Chief Economist Jed Kolko, who found that among metro areas, Boston and New York are building more than in the past.

In the 25 years since 1989, the U.S. has started building at an average annual rate of about 248,000 new multifamily units. By that measure, our current 423,000 is a veritable boom. Still, construction in the the U.S. has come at a far faster pace in the past. During the 25 years leading up to 1989, builders broke ground on 467,000 units each year, on average. In the early 1970s, the rate briefly hit 1 million new units a year.

The recent building spree is a response to the current urban housing crunch. For a good part of the last quarter-century, the suburbs absorbed the growing population. They ran out of steam in the early 2000s, and citieswith mass transit and cultural cachethave made a comeback. As these new apartments come online, rents may ease. Just how much depends on just what kind of omen the figures for July 2014 turn out to be.

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Apartment Construction Ominously Nears 25-Year High

In the four years since the approval of the Downtown Columbia Plan a master guiding document aimed at revitalizing the heart of Howard County's core city Columbia Town Center's progress toward becoming a true urban destination has been marked by the addition of high-profile restaurants and retailers, the renovation and expansion of city landmarks and the construction of a new, modern apartment building.

This week, its progress will be marked by what some say is the biggest boon so far: the opening of the county's first Whole Foods Market, which occurred Wednesday inside the community's iconic, Frank Gehry-designed lakefront building.

But, according to county officials, the revitalization is not just about adding mouth-watering restaurants, high-end retail and arguably the nation's most coveted grocer. It's also about putting in the work and making downtown a thriving employment center.

"There has to be more than just some great retail and cool apartments," said Mark Thompson, the county's director of downtown redevelopment. "For the Downtown Columbia Plan to be successful, the employment piece needs to be there. And it needs to be there in a big way."

And although it hasn't been as obvious, downtown's growth as a destination for employers has grown in lock step with its other, higher-profile amenities. According to Thompson, in spring 2012 the vacancy rate for the 19 office buildings in downtown was 21 percent. In just two years, that number has dropped to 14 percent. If you exclude the American City Building a nine-story lakefront structure with high vacancies that owner Howard Hughes Corp. is in the midst of evaluating Thompson said that number drops to 8 percent.

It's a trend that he and others, such as County Executive Ken Ulman, say shows progress in the revitalization of the downtown's employment base.

"Town Center, like any downtown, can only thrive when it has balance," Ulman said. "There has been a lot of demand for retail in downtown, and the residential is coming along. ... but the important third leg of the stool has to be the office product."

Ulman said one tangible sign of progress was the July groundbreaking of Little Patuxent Square, a nine-story, mixed-use building in the lakefront neighborhood that will house 160,000 square feet of office space, in addition to residential and retail. The structure, built by Costello Construction, was the first new commercial building in downtown in more than a decade.

"Costello's project was important because it's a sign that the demand is there," Ulman said. "It's a really important validation of the economy."

Renovations and relocations

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Downtown Columbia burgeoning as employment hub

Apartment construction in July hit a 25-year high, fueling the months pickup in housing while single-family home construction increased modestly. U.S. home construction, typically volatile month to month, increased 15.7 percent last month, the fastest pace since November after declines of 4 percent in June and 7.4 percent in May, the Commerce Department said Tuesday.

And while single-family building permits increased just 0.8 percent in July versus the year-earlier period, apartment permits increased 17.5 percent over the same period, according to Commerce Department data.

The surge in apartment construction fuels less economic growth nationally than a comparable rise in single-family homes because single-family housing multiplies consumer spending and job growth more, according to Diane Swonk, chief economist of Mesirow Financial.

We tend to see more employment and spillover spending from owner than renters, but it is still a move in the right direction, she blogged Tuesday.

Home owners tend to buy more furniture and home improvement products than apartment renters, for example.So the overall gain in construction, a sector the Federal Reserve keeps a close eye on as an indicator of the economys health, will impact spending, production and employment less than in the past.

The apartment surge is still a positive sign for job growth, but economists hope more renters will save enough for down payments or qualify for mortgages to buy homes. Rising rents may push renters onto the single-family housing market. According to the Labor Department, rents rose in July at their fastest pace in five years, a 3.3 percent rise from a year ago.

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US Apartment Construction Hits 25-Year High, Supporting July's Housing Gains