August 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 30.9 percent at a seasonally adjusted annual rate in August 2019 to 424,000, after a 9.5 percent decline in July. On a year-over-year basis, the August starts buildings with five or more units were 13.7 percent above its August 2018 level.      

NAHB’s Multifamily Production Index (MPI) increased 16 points to 56 in the second 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 August on a seasonally adjusted basis. Over the month of August, the Energy Price Index fell by 1.9 percent, after a 1.3 percent increase in July, while food prices remained unchanged. Excluding the volatile food and energy components, the “core” CPI rose by 0.3 percent in August, after a 0.3 percent increase in July. 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 August. Since the increase in rental prices was slightly higher than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index was nearly unchanged over the month of August. 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 rose by 1.7 percent at a seasonally adjusted annual rate to 590,000 units in August. Regionally, sales in the Northeast grew by 22.2 percent, while sales in the West declined by 7.1 percent. Sales in the Midwest and South remained unchanged. The months’ supply of homes decreased to 4.4 months in August, from 4.7 months in July. Over the past year, median prices on condos and co-ops nationwide rose by 5.2 percent to $257,600 in August. Median prices increased in the Northeast by 1.4 percent, the Midwest by 5.8 percent, South (5.5 percent) and West (6.5 percent).

Building Materials:

The price of inputs to construction industries rose by 0.4 percent on a not seasonally adjusted basis over the past 12 months ending in August. 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 0.4 percent, non-residential construction climbed 0.7 percent and residential construction remained unchanged. The price of maintenance and repairs construction remained unchanged over the past year as well, while non-residential maintenance and repairs fell by 0.2 percent and residential maintenance grew by 0.2 percent over the past year. Meanwhile, the price of cement rose by 2.8 percent. Gypsum prices decreased by 8.4 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.

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