December 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 15.2 percent at a seasonally adjusted annual rate in December 2020 to 312,000 after a 9.5 percent increase in November. On a year-over-year basis, the December starts buildings with five or more units were 40.0 percent below its December 2019 level.      

NAHB’s Multifamily Production Index (MPI) increased by 11 to 48 in the third 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 December on a seasonally adjusted basis. Over the month of December, the Energy Price Index rose by 4.0 percent, after a 0.4 percent increase in November, while food prices climbed by 0.3 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent in December, after a 0.2 percent increase in November. Shelter prices, which are the largest consumer expenditure category, rose by 0.1 percent as rental prices, a component of the shelter index, grew 0.1 percent in December. Since the increase in rental prices was equal to the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index remained unchanged over the month of December. Over the past year, NAHB’s Real Rent Index has risen by 0.7 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives grew by 1.4 percent at seasonally adjusted annual rate of 730,000 units in December. Regionally, sales in the Northeast and Midwest rose by 7.7 percent and 12.5 percent, while sales in the West declined by 6.3 percent. Sales in the South stayed unchanged. The months’ supply of homes fell to 2.9 months in December. Over the past year, median prices on condos and co-ops nationwide increased by 6.9 percent to $272,200 in December. Median prices in the Northeast, Midwest, South and West climbed by 8.7 percent, 4.3 percent, 8.0 percent and 5.5 percent, respectively.

Building Materials:

The price of inputs to construction industries rose by 5.0 percent on a not seasonally adjusted basis over the past 12 months ending in December. 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 5.0 percent. The price of inputs to new non-residential construction rose by 3.7 percent while the price of inputs to new residential construction climbed by 6.2 percent. The price of maintenance and repairs construction increased by 5.2 percent over the past year. The price of inputs to non-residential maintenance and repairs jumped by 4.7 percent while the price of inputs to residential maintenance climbed by 5.7 percent over the past year. Meanwhile, the price of cement rose by 1.9 percent. Gypsum prices increased by 4.0 percent and the price of softwood plywood surged by 52.9 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.