March 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 decreased by 32.1 percent at a seasonally adjusted annual rate in March 2020 to 347,000 after a 17.3 percent decline in February. On a year-over-year basis, the March starts of buildings with five or more units were 3.9 percent below its March 2019 level.      

NAHB’s Multifamily Production Index (MPI) stayed at 49 in the fourth 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) fell by 0.4 percent in March on a seasonally adjusted basis. Over the month of March, the Energy Price Index declined by 5.8 percent, after a 2.0 percent drop in February, while food prices increased by 0.3 percent. Excluding the volatile food and energy components, the “core” CPI decreased by 0.1 percent in March, after a 0.2 percent increase in February. Shelter prices, which are the largest consumer expenditure category, remained unchanged as rental prices, a component of the shelter index, climbed by 0.3 percent in March. Since the increase in rental prices was higher than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index rose by 0.4 percent over the month of March. 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 fell by 11.7 percent at seasonally adjusted annual rate of 530,000 units in March. Regionally, sales in the Northeast, Midwest, South and West decreased by 9.1 percent, 22.2 percent, 7.7 percent and 14.3 percent, respectively. The months’ supply of homes increased to 4.0 months in March. Over the past year, median prices on condos and co-ops nationwide rose by 7.9 percent to $263,400 in March. Median prices in the Northeast, Midwest, South and West increased by 11.3 percent, 7.5 percent, 7.4 percent and 5.9 percent, respectively.

Building Materials:

The price of inputs to construction industries fell by 0.1 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 remained unchanged. The price of inputs to new non-residential construction dropped by 0.3 percent while the price of inputs to new residential construction rose by 0.3 percent. The price of maintenance and repairs construction decreased by 0.3 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 dropped by 0.2 percent over the past year. Meanwhile, the price of cement rose by 0.9 percent. Gypsum prices remained unchanged and the price of softwood plywood fell by 11.6 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.