Market Pulse for August 2015

Multifamily Starts: Following two consecutive months under 300,000, housing starts of buildings with five or more units measured at a seasonally adjusted annual rate soared 31.9 percent over the month of April 2015 to 389,000. This is the highest level recorded since July 2014. In February, housing starts of buildings with five or more units declined on a monthly basis by 20.7 percent to 292,000 and in March, housings starts of buildings with five or more units was 295,000. To smooth volatility in the data, a three-month moving average of the housing starts data is calculated. On a three-month moving average basis, the month-over-month increase in housing starts of buildings with five units or more was moderate. In April 2015, the three-month moving average of housings starts of buildings with five or more units was 325,000, 2.2 percent higher than 318,000 calculated in March 2015. This is the 18th consecutive month that the three-month moving average of housing starts of buildings with five or more units has exceeded 300,000. Over the past year-and-a-half, the three-month moving average has ranged between 313,000, calculated in March 2014, and 360,000, recorded in September 2014.

CPI vs. Rent: The seasonally adjusted Consumer Price Index—Urban Consumer (CPI) rose by 0.1 percent in April 2015. However, over the last 12 months, the price of a basket of consumer goods was lower by 0.2 percent. On a monthly basis, energy prices fell by 1.3 percent. Over the past 12 months energy prices have declined by 19.4 percent. Meanwhile, food prices were unchanged over the month of April 2015, but are 2.0 percent higher than their level 12 months ago. The month-over-month increase in the CPI reflected an increase in consumer prices outside of energy and food prices. Excluding energy and food prices, “core-CPI” rose by 0.3 percent over the month of April 2015 and are 1.8 percent above their level one year ago. Shelter prices, which account for the largest portion of consumer expenditures, rose by 0.3 percent as rental prices increased by 0.3 percent. Real rental prices remained unchanged during the month. NAHB’s Real Rent Index was flat over the month at a 0.0 percent monthly growth rate.

Building Materials: The price of inputs to construction fell by 4.0 percent on a non-seasonally adjusted basis over the 12 months ending in April 2015. 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 eased by 3.9 percent. The price of inputs to new non-residential construction fell by 5.1 percent while the price of inputs to new residential construction dropped 2.7 percent. Meanwhile, the price of maintenance and repairs fell by 4.7 percent over the past year. The price of inputs to non-residential maintenance and repairs decreased 4.9 percent while the price of inputs to residential maintenance and repairs declined by 4.6 percent. The price of cement rose by 7.5 percent, the price of softwood plywood grew by 8.2 percent and the price of gypsum products increased by 2.3 percent. The price of oriented strand board (OSB) declined by 11.1 percent.

Existing Condo Sales and Prices: Existing condo and co-op sales, measured at a seasonally adjusted annual rate, were unchanged over the month of April 2015 at 610,000. This partly reflects an upward revision of 10,000 sales during the month of March 2015. Although the growth in the number of condo and co-op sales was flat nationwide, the experience at the regional level varied. Existing condo and co-op sales in the Northeast declined by 9.1 percent, 10,000, over the month. However, this decline was offset by a 7.1 percent increase, 10,000, in condo and co-op sales in the West. At the same time, condo and co-op sales in the Midwest and in the South were unchanged over the month. Meanwhile, the March 2015 existing condo and co-op inventory level was 260,000. The months’ supply of existing condos and co-ops, declined by 1.9 percent over the month to 5.1 months. Median existing condo and co-op sales prices rose by 0.4 percent on a not seasonally adjusted basis over the past year to $206,100.

Michael Neal is a senior economist with the National Association of Home Builders (NAHB). In this capacity, he monitors macroeconomic and financial issues that affect the U.S. and local housing markets. Prior to joining NAHB, he worked at the Joint Economic Committee of the U.S. Congress, the Federal Reserve, the Congressional Budget Office and Goldman, Sachs & Co.