September 2017

Market Pulse section compiled by IvyLee Rosario. To comment, email ivylee.rosario@cpe-mhn.com.

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 declined by 6.2 percent at a seasonally adjusted annual rate in September 2017 to 286,000, after an 8.4 percent decline in August. Over the past 12 months, starts of five or more unit buildings rose 7.9 percent in September, after six consecutive months of declines.

NAHB’s Multifamily Production Index (MPI) bounced back to trend in the second quarter of 2017. 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. The MPI climbed eight points to 56 in the second quarter of 2017. This quarter’s reading is the highest since the third quarter of 2015.

CPI vs. Rent:

The headline Consumer Price Index (CPI) rose 0.5 percent in September on a seasonally adjusted basis. Over the month of September, the Energy Price Index rose 6.1 percent, following a 2.8 percent increase in August. Meanwhile, food prices increased 0.1 percent in September, after the 0.1 percent increase in August. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, slower than the 0.2 percent increase in August. 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 0.2 percent in September. Since the increase in rental prices exceeded the growth in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index rose over the month of September, increasing by 0.1 percent. Over the past year, NAHB’s Real Rent Index has risen by 2.1 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives decreased by 1.6 percent at a seasonally adjusted annual rate to 600,000 units in September 2017. Regionally, sales in the Northeast and Midwest were unchanged. Meanwhile, sales in the South declined by 11.1 percent while sales in the West rose by 14.3 percent. The months’ supply of homes rose to 4.4 months from 4.3 months in August. Median prices on condos and co-ops nationwide rose by 4.1 percent over the past year to $231,300 in September 2017. Median prices increased by 6.6 percent in the Northeast, Midwest (6.5%), South (1.6%) and West (3.7%).

Building Materials:

The price of inputs to construction rose by 3.8 percent on a not seasonally adjusted basis over the 12 months ending in September 2017. 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 3.8 percent, new non-residential construction (3.8%) and new residential construction (3.7%). The price of maintenance and repairs construction grew by 3.8 percent, non-residential maintenance and repairs (4.1%) and residential maintenance and repairs (3.9%). Meanwhile, the price of oriented strand board (OSB) grew by 19.8 percent over the past 12 months, cement (4.5%), gypsum (8%) and softwood plywood (7.6%).

Jing Fu is a senior economist at NAHB. She monitors developments in the economy to identify trends and issues related to the housing industry. She also assists in forecasting and analyzing the state and metropolitan area housing market, producing research and articles detailing sectors and the geography of the home building industry. Prior to joining NAHB, Jing worked at Thomson Reuters as a data specialist and has extensive knowledge and experience on quantitative research and large data set analysis. She holds an M.A. in Economics from the University of Kansas and is currently completing the requirements for her Ph.D.