April 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 increased by 2.3 percent at a seasonally adjusted annual rate in April 2019 to 359,000 after a 0.3 percent drop in March. On a year-over-year basis, the April starts of buildings with five or more units were 1.4 percent above its April 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 0.3 percent in April on a seasonally adjusted basis. Over the month of April, the Energy Price Index rose by 2.9 percent, after a 3.5 percent increase in March, while food prices fell by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent, after a 0.1 percent increase in March. Shelter prices, which are the largest consumer expenditure category, grew by 0.4 percent as rental prices, a component of the shelter index, grew by 0.4 percent in April. 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 0.3 percent over the month of April. 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 rose by 5.6 percent at a seasonally adjusted annual rate to 570,000 units in April. Regionally, sales in the Northeast, Midwest and West remained unchanged, while sales in the South grew by 12.5 percent. The months’ supply of homes increased to 4.7 months in April, from 4.5 months in March. Over the past year, median prices on condos and co-ops nationwide rose by 3.4 percent to $251,000 in April. Median prices increased in the Northeast by 6.4 percent, the Midwest by 4.4 percent and the South by 2.5 percent. Median prices in the West declined by 1.5 percent.

Building Materials:

The price of inputs to construction industries rose by 2.8 percent on a not seasonally adjusted basis over the past 12 months ending in April. 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 2.9 percent, new non-residential construction (3.2%) and new residential construction (2.5%). The price of maintenance and repairs construction grew by 2.8 percent, while non-residential maintenance and repairs rose by 2.9 percent and residential maintenance rose by 2.8 percent over the past year. Meanwhile, the price of cement rose by 3.5 percent, Gypsum decreased by 6.1 percent and softwood plywood decreased by 16.0 percent over the past 12 months. Furthermore, the price of oriented strand board (OSB) was estimated to fall 3.9 percent monthly in April, based on the data from Random Lengths.

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.