August 2020

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 fell by 25.4 percent at a seasonally adjusted annual rate in August 2020 to 375,000 after a 37.1 percent increase in July. On a year-over-year basis, the August starts of buildings with five or more units were 16.9 percent below its August 2019 level.      

NAHB’s Multifamily Production Index (MPI) increased by 10 to 37 in the second quarter of 2020. 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 0.4 percent in August on a seasonally adjusted basis. Over the month of August, the Energy Price Index rose by 0.9 percent, after a 2.5 percent increase in July, while food prices grew by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI increased by 0.4 percent in August, after a 0.6 percent increase in July. Shelter prices, which are the largest consumer expenditure category, rose by 0.1 percent as rental prices, a component of the shelter index, increased by 0.1 percent in August. Since the increase in rental prices was lower than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index fell by 0.3 percent over the month of August. Over the past year, NAHB’s Real Rent Index has risen by 1.2 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 8.6 percent at seasonally adjusted annual rate of 630,000 units in August. Regionally, sales in the Northeast, Midwest and South rose by 25.0 percent, 14.3 percent and 6.9 percent, respectively. Sales in the West remained unchanged. The months’ supply of homes stayed at 4.2 months in August. Over the past year, median prices on condos and co-ops nationwide grew by 7.8 percent to $273,300 in August. Median prices in the Northeast, Midwest, South and West climbed by 5.0 percent, 6.8 percent, 12.7 percent and 7.3 percent, respectively.

Building Materials:

The price of inputs to construction industries rose by 1.4 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 1.3 percent. The price of inputs to new non-residential construction rose by 0.1 percent while the price of inputs to new residential construction climbed by 2.5 percent. The price of maintenance and repairs construction increased by 1.8 percent over the past year. The price of inputs to non-residential maintenance and repairs jumped by 1.2 percent while the price of inputs to residential maintenance climbed by 2.4 percent over the past year. Meanwhile, the price of cement rose by 1.4 percent. Gypsum prices increased by 0.5 percent and the price of softwood plywood surged by 38.9 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.