Market Pulse for August 2018
- Jul 11, 2018
According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, starts of buildings with five or more units rose by 11.3 percent at a seasonally adjusted annual rate in May 2018 to 404,000, after a 15.8 percent decrease in April. On a year-over-year basis, the May starts of five or more unit buildings were 27.4 percent above its May 2017 level.
NAHB’s Multifamily Production Index (MPI) remained at 53 in the first quarter of 2018. The MPI measures builder and developer sentiment about current conditions in the multifamily market on a scale of 0 to 100. The index is scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
CPI vs. Rent:
The headline Consumer Price Index (CPI) rose by 0.2 percent in May on a seasonally adjusted basis, the same increase as last month. Over the month of May, the Energy Price Index increased by 0.9 percent, after a 1.4 percent increase in April, and food prices were unchanged. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, slightly faster than the 0.1 percent increase in April. Shelter prices, which are the largest consumer expenditure category, grew by 0.3 percent as rental prices, a component of the shelter index, grew by 0.3 percent in May. Since the increase in rental prices exceeded the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index rose over the month of May by 0.1 percent. Over the past year, NAHB’s Real Rent Index has risen by 1.4 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives rose by 1.6 percent at a seasonally adjusted annual rate to 620,000 units in May. Regionally, sales in the Northeast, Midwest and South were unchanged, while sales in the West increased by 7.1 percent in May. The months’ supply of homes decreased to 3.9 months in May, from 4.2 months in April. Median prices on condos and co-ops nationwide rose by 2.5 percent over the past year to $244,100 in May. Median prices increased in the Northeast by 5.1 percent, Midwest (1.7%) and West (8.4%), while median prices in the South decreased by 1 percent in May.
The price of inputs to construction industries rose by 7.4 percent on a not seasonally adjusted basis over the past 12 months ending in May. This component of the Producer Price Index is composed of the price of inputs to new construction and the price of maintenance and repairs. Over the past year, the price of inputs to new construction increased by 7.3 percent, inputs to new non-residential construction (7.7%) and inputs to new residential construction (6.9%). The price of maintenance and repairs construction grew by 7.4 percent over the past year, inputs to non-residential maintenance and repairs (7.7%) and inputs to residential maintenance (7.1%). Meanwhile, the price of oriented strand board (OSB) rose by 12.5 percent, cement rose by 2.1 percent, Gypsum (4.9%) and softwood plywood (24%) over the past 12 months.
Jing Fu, Ph.D. is a Senior Economist at NAHB. She monitors developments in the economy to identify trends and issues related to the housing industry. She also assists in forecasting and analyzing the state and metropolitan area housing market, producing research and articles detailing sectors and the geography of the home building industry. Prior to joining NAHB, Jing worked at Thomson Reuters as a data specialist and has extensive knowledge and experience on quantitative research and large data set analysis. She holds an M.A. and Ph.D. in Economics from the University of Kansas.