June 2019

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 9.4 percent at a seasonally adjusted annual rate in June 2019 to 396,000 after a 13.5 percent increase in May. On a year-over-year basis, the June starts of five or more unit buildings were 25.3 percent above its June 2018 level.      

NAHB’s Multifamily Production Index (MPI) dropped seven points to 40 in the first quarter of 2019. 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) increased by 0.1 percent in June on a seasonally adjusted basis. Over the month of June, the Energy Price Index fell by 2.3 percent, after a 0.6 percent decline in May, while food prices rose by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.3 percent in June, after a 0.1 percent increase in May. 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 June. Since the increase in rental prices exceeded the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index increased by 0.1 percent over the month of June. Over the past year, NAHB’s Real Rent Index has risen by 1.7 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives fell by 3.3 percent at a seasonally adjusted annual rate to 580,000 units in June. Regionally, sales in the Northeast grew by 10 percent, while sales in the South and West declined by 6.9 percent and 7.1 percent, respectively. Sales in the Midwest remained unchanged. The months’ supply of homes increased to 4.6 months in June, from 4.5 months in May. Over the past year, median prices on condos and co-ops nationwide rose by 2.8 percent to $260,100 in June. Median prices in the Northeast, Midwest and South increased by 3.1 percent, 1.9 percent and 7.3 percent, respectively, while median prices in the West fell by 0.3 percent.

Building Materials:

The price of inputs to construction industries remained unchanged on a not seasonally adjusted basis over the past 12 months ending in June. 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 0.1 percent, non-residential construction climbed 0.5 percent and new residential construction fell by 0.4 percent. The price of maintenance and repairs construction declined by 0.5 percent over the past year, non-residential maintenance and repairs fell by 0.5 percent and residential maintenance decreased by 0.4 percent over the past year. Meanwhile, the price of cement rose by 2.9 percent. Gypsum prices decreased by 8.1 percent and the price of softwood plywood fell by 21.8 percent over the past 12 months.

Fan-Yu Kuo is an Economist at NAHB where she conducts economic research related to macroeconomics and forecasting. She also assists in economic and housing data updates. Prior to NAHB, Fan-Yu was a Research Assistant at the Academia Sinica. She holds an M.A. in International Economics and Finance from Johns Hopkins University and another M.A. in International Political Economy from King’s College London.