January 2019

Starts of buildings with five or more units increased by 4.0 percent at a seasonally adjusted annual rate in January 2019 to 289,000 after a 28.2 percent decline in December.

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 4.0 percent at a seasonally adjusted annual rate in January 2019 to 289,000 after a 28.2 percent decline in December. On a year-over-year basis, the January starts of five or more unit buildings were 33.6 percent below its January 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) has remained unchanged in January on a seasonally adjusted basis since October. Over the month of January, the Energy Price Index decreased by 3.1 percent, after a 2.6 percent decline in December, while food prices increased by 0.2 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, the same increase as last month. 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 January. Since the increase in rental prices is slightly higher than the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index was increased by 0.1 percent over the month of January. 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 increased by 3.6 percent at a seasonally adjusted annual rate to 570,000 units in January. Regionally, sales in the Northeast and South increased by 9.1 percent and 4.0 percent, while sales in the Midwest and West remained unchanged. The months’ supply of homes decreased to 3.8 months in January, from 4.1 months in December. Median prices on condos and co-ops nationwide increased by 0.1 percent over the past year to $233,000 in January. Median prices increased in the Northeast by 0.9 percent, Midwest by 0.4 percent and South by 3.2 percent. Median prices in the West decreased by 1.6 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 January. 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 2.8 percent, new non-residential construction climbed 2.8 percent and new residential construction rose by 3.0 percent. The price of maintenance and repairs construction grew by 2.3 percent, non-residential maintenance and repairs rose by 2.3 percent and residential maintenance rose by 2.6 percent over the past year. Meanwhile, the price of oriented strand board (OSB) declined 18.8 percent, the price of cement rose by 2.2 percent, softwood plywood decreased 9.3 percent and Gypsum prices were unchanged 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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