Market Pulse for December 2018

Construction starts for properties consisting of at least five units were up 4.5 percent year-over-year in September.

Multifamily Starts:

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 decreased by 12.9 percent at a seasonally adjusted annual rate in September 2018 to 324,000, after a 17.4 percent increase in August. On a year-over-year basis, the September starts of five or more unit buildings were 4.5 percent above its September 2017 level.     

NAHB’s Multifamily Production Index (MPI) declined two points to 51 in the second 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 0.1 percent in September on a seasonally adjusted basis, slower than a 0.2 percent increase in August. Over the month of September, the Energy Price Index declined by 0.5 percent, after a 1.9 percent increase in August, while food prices increased by 0.1 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, the same increase as in August. Shelter prices, which are the largest consumer expenditure category, grew by 0.2 percent as rental prices, a component of the shelter index, grew by 0.2 percent in September. 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 September, increasing 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 declined by 3.4 percent at a seasonally adjusted annual rate to 570,000 units in September. Regionally, sales in the Midwest increased by 14.3 percent, while sales in the South declined by 10.7 percent. Sales in the Northeast and West were unchanged. The months’ supply of homes was 4.5 months in September, unchanged from last month. Median prices on condos and co-ops nationwide rose by 1.5 percent over the past year to $239,200 in September. Median prices increased by 0.3 percent in the Northeast, 0.7 percent in the Midwest and 5.4 percent in the West, while median prices in the South decreased by 0.8 percent.

Building Materials:

The price of inputs to construction industries rose by 6.2 percent on a not seasonally adjusted basis over the past 12 months ending in September. 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 6.2 percent, new non-residential construction (6.0%) and new residential construction (6.2%). The price of maintenance and repairs construction grew by 6.1 percent over the past year, non-residential maintenance and repairs (6.3%) and residential maintenance (6.2%). Meanwhile, the prices of oriented strand board (OSB) rose by 1.8 percent, cement (2.3%), Gypsum (7.9%) and softwood plywood (14.6%), over the past 12 months.

For more information on the NAHB Multifamily program, please visit NAHB Multifamily.

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.