Market Pulse for February 2019

Over the month of November, the Energy Price Index decreased by 2.2 percent, after a 2.4 percent increase in October, while food prices increased by 0.2 percent, according to National Association of Home Builders research.

by Jing Fu

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 rose by 24.9 percent at a seasonally adjusted annual rate in November 2018 to 417,000 after a 4.3 percent decline in October. On a year-over-year basis, the November starts of five or more unit buildings were 20.2 percent above its November 2017 level.      

NAHB’s Multifamily Production Index (MPI) dropped three points to 48 in the third 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) remained unchanged in November on a seasonally adjusted basis, following a 0.3 percent increase in October. Over the month of November, the Energy Price Index decreased by 2.2 percent, after a 2.4 percent increase in October, while food prices increased by 0.2 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, the same increase as last month. 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 0.4 percent in November. Since the increase in rental prices is slightly higher than the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index was increased by 0.1 percent over the month of November. Over the past year, NAHB’s Real Rent Index has risen by 1.3 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 1.7 percent at a seasonally adjusted annual rate to 610,000 units in November. Regionally, sales in the South decreased by 3.7 percent, while sales in the West and Northeast rose by 7.1 percent and 9.1 percent, respectively. Sales in the Midwest were unchanged. The months’ supply of homes decreased to 4.0 months in November, from 4.4 months in October. Median prices on condos and co-ops nationwide declined by 1.3 percent over the past year to $236,400 in November. Median prices decreased in the Northeast by 1.5 percent, South by 0.6 percent and West by 1.4 percent, while median prices in the Midwest increased by 1.2 percent.

Building Materials:

The price of inputs to construction industries rose by 4.9 percent on a not seasonally adjusted basis over the past 12 months ending in November. 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 4.9 percent, inputs to new non-residential construction climbed 4.9 percent, and inputs to new residential construction rose by 4.8 percent. The price of maintenance and repairs construction grew by 4.7 percent, inputs to non-residential maintenance and repairs rose by 4.8 percent, and inputs to residential maintenance rose by 4.7 percent, over the past year. Meanwhile, the price of oriented strand board (OSB) declined 17.5 percent, the price of cement rose by 2.6 percent, Gypsum increased by 2.0 percent and softwood plywood decreased 3.2 percent, 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.