March 2019

On a year-over-year basis, the March starts of buildings with five or more units were 21.8 percent below the March 2018 level.

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 3.4 percent at a seasonally adjusted annual rate in March 2019 to 337,000 after a 13.3 percent increase in February. On a year-over-year basis, the March starts of buildings with five or more units were 21.8 percent below its March 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 0.4 percent in March on a seasonally adjusted basis. Over the month of March, the Energy Price Index rose by 3.5 percent, after a 0.4 percent increase in February, while food prices increased by 0.2 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent, after a 0.1 percent increase in February. Shelter prices, which are the largest consumer expenditure category, grew by 0.4 percent as rental prices, a component of the shelter index, grew by 0.4 percent in March. 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 0.3 percent over the month of March. 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 fell by 5.3 percent at a seasonally adjusted annual rate to 540,000 units in March. Regionally, sales declined in the Northeast by 9.1 percent, Midwest (-12.5%) and South (-4%), while sales in the West remained unchanged. The months’ supply of homes increased to 4.5 months in March, from 4.1 months in February. Over the past year, median prices on condos and co-ops nationwide rose by 3.6 percent to $244,400 in March. Median prices increased in the Northeast by 3.1 percent, Midwest (3.8%), South (5.2%) and West (0.4%). 

Building Materials:

The price of inputs to construction industries rose by 2.6 percent on a not seasonally adjusted basis over the past 12 months ending in March. 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 2.7 percent, new non-residential construction (3.3%) and new residential construction (2.1%). The price of maintenance and repairs construction grew by 2.4 percent over the past year, while non-residential maintenance and repairs rose by 2.6 percent and residential maintenance increased by 2.2 percent over the past year. The price of cement rose by 2.4 percent, meanwhile Gypsum prices decreased by 8.6 percent, softwood plywood (-16.6%) and oriented strand board (OSB) was estimated to fall 0.8 percent monthly in March, based on the data from Random Lengths[1].

Note: [1] The March Producer Price Index reading for OSB was not released by the Bureau of Labor Statistics (BLS). The 0.8 percent decline was estimated using the February and March 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.

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