July 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 decreased by 17.2 percent at a seasonally adjusted annual rate in July 2019 to 303,000 after a 16.4 percent decline in June. On a year-over-year basis, the July starts of buildings with five or more units were 4.7 percent below its July 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 0.3 percent in July on a seasonally adjusted basis. Over the month of July, the Energy Price Index grew by 1.3 percent, after a 2.3 percent decline in June, while food prices rose by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.3 percent in July, after a 0.3 percent increase in June. 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 July. Since the increase in rental prices equaled the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index remained unchanged over the month of July. Over the past year, NAHB’s Real Rent Index has risen by 1.6 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives has not changed at a seasonally adjusted annual rate to 580,000 units in July. Regionally, sales in the South and West grew by 3.7 percent and 7.7 percent, while sales in the Northeast declined by 18.2 percent. Sales in the Midwest remained unchanged. The months’ supply of homes stayed the same in July, from 4.6 months in June. Over the past year, median prices on condos and co-ops nationwide rose by 2.5 percent to $254,300 in July. Median prices increased in the Northeast by 2.5 percent, Midwest (3.0 percent), South (5.3 percent) and West (2.0 percent).

Building Materials:

The price of inputs to construction industries rose by 0.1 percent on a not seasonally adjusted basis over the past 12 months ending in July. 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 0.2 percent, non-residential construction (0.5 percent) and residential construction (-0.2 percent). The price of maintenance and repairs construction declined by 0.1 percent and non-residential maintenance and repairs fell 0.3 percent, while residential maintenance grew by 0.1 percent over the past year. Meanwhile, the price of cement rose by 2.8 percent. Gypsum prices and softwood plywood decreased by 7.3 percent and 24.0 percent over the past 12 months, respectively.

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.