February 2019
On a year-over-year basis, February starts of multifamily projects with five or more units were 5.4 percent below February 2018.
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 23.5 percent at a seasonally adjusted annual rate in February 2019 to 352,000 after a 6.6 percent decline in January. On a year-over-year basis, the February starts of buildings with five or more units were 5.4 percent below its February 2018 level.
NAHB’s Multifamily Production Index (MPI) dropped one point to 47 in the fourth quarter of 2018. 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 0.2 percent in February on a seasonally adjusted basis. Over the month of February, the Energy Price Index rose by 0.4 percent, after a 3.1 percent decline in January, while food prices increased by 0.4 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, after a 0.2 percent increase in January. 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 0.3 percent in February. 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 0.2 percent over the month of February. Over the past year, NAHB’s Real Rent Index has risen by 1.4 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives remained unchanged at a seasonally adjusted annual rate to 570,000 units in February. Regionally, sales in the Midwest and West increased by 14.3 percent and 8.3 percent, respectively, while sales in the Northeast and South declined by 8.3 percent and 3.8 percent, respectively. The months’ supply of homes increased to 4.0 months in February, from 3.8 months in January. Over the past year, median prices on condos and co-ops nationwide fell by 3.1 percent to $233,300 in February. Median prices in the Northeast, Midwest and South increased by 3.3 percent, 4.7 percent and 4.7 percent, respectively, while median prices in the West decreased by 1.2 percent.
Building Materials:
The price of inputs to construction industries rose by 2.4 percent on a not seasonally adjusted basis over the past 12 months ending in February. 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 2.4 percent. The price of inputs to new non-residential construction climbed 3.0 percent while the price of inputs to new residential construction rose by 2.0 percent. The price of maintenance and repairs construction grew by 1.8 percent over the past year. The price of inputs to non-residential maintenance and repairs rose by 2.0 percent while the price of inputs to residential maintenance rose by 2.0 percent over the past year. Meanwhile, the price of cement rose by 2.2 percent. Gypsum prices decreased by 7.4 percent and the price of softwood plywood decreased by 13.9 percent over the past 12 months. Furthermore, the price of oriented strand board (OSB) was estimated to grow 4.3 percent monthly in February, based on the data from Random Lengths[1].
Note: [1] The February Producer Price Index reading for OSB was not released by the Bureau of Labor Statistics (BLS). The 4.3 percent increase was estimated using the January and February 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.
