July 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 rose by 56.7 percent at a seasonally adjusted annual rate in July 2020 to 547,000 after a 15.6 percent increase in June. On a year-over-year basis, the June starts of buildings with five or more units were 67.8 percent above its July 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 0.6 percent in July on a seasonally adjusted basis. Over the month of July, the Energy Price Index rose by 2.5 percent, after a 5.1 percent increase in June, while food prices fell by 0.4 percent. Excluding the volatile food and energy components, the “core” CPI grew by 0.6 percent in July, after a 0.2 percent increase in June. Shelter prices, which are the largest consumer expenditure category, rose by 0.2 percent as rental prices, a component of the shelter index, increased by 0.2 percent in June. 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 0.4 percent over the month of July. Over the past year, NAHB’s Real Rent Index has risen by 1.5 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 31.8 percent at seasonally adjusted annual rate of 580,000 units in July. Regionally, sales in the Northeast, Midwest, South and West rose by 33.3 percent, 40.0 percent, 26.1 percent and 40.0 percent, respectively. The months’ supply of homes dropped to 4.1 months in July. Over the past year, median prices on condos and co-ops nationwide grew by 6.4 percent to $270,100 in July. Median prices in the Northeast, Midwest, South and West climbed by 5.4 percent, 5.3 percent, 9.1 percent and 5.8 percent, respectively.

Building Materials:

The price of inputs to construction industries fell by 0.3 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 decreased by 0.3 percent. The price of inputs to new non-residential construction dropped by 1.0 percent while the price of inputs to new residential construction rose by 0.5 percent. The price of maintenance and repairs construction increased by 0.1 percent over the past year. The price of inputs to non-residential maintenance and repairs fell by 0.5 percent while the price of inputs to residential maintenance climbed by 0.5 percent over the past year. Meanwhile, the price of cement rose by 1.2 percent. Gypsum prices increased by 0.5 percent and the price of softwood plywood jumped by 14.3 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.