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 16.1 percent at a seasonally adjusted annual rate in March 2018 to 439,000, after an 11.7 percent decrease in February. On a year-over-year basis, the March starts of five or more unit buildings were 23.7 percent above its March 2017 level.
NAHB’s Multifamily Production Index (MPI) gained seven points to 53 in the fourth 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.
CPI vs. Rent:
The headline Consumer Price Index (CPI) decreased by 0.1 percent in March on a seasonally adjusted basis. Over the month of March, the Energy Price Index declined by 2.8 percent, after a 0.1 percent increase in February, and food prices rose by 0.1 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, the same increase as 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 0.3 percent in March. Since the increase in rental prices exceeded the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index rose over the month of March, increasing by 0.1 percent. 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 rose by 5.2 percent at a seasonally adjusted annual rate to 610,000 units in March. Regionally, sales in the Northeast, Midwest and South increased by 10 percent to 110,000 units, 12.5 percent to 90,000 units and 8 percent to 270,000 units, respectively. Sales in the West declined by 6.7 percent, from 150,000 units in February to 140,000 units in March. The months’ supply of homes increased to 3.9 months in March, from 3.8 months in February. Median prices on condos and co-ops nationwide rose by 4.8 percent over the past year to $236,100 in March. Median prices increased in the Northeast by 5.5 percent, Midwest (4.3%), South (0.3%) and West (7.9%).
The price of inputs to construction industries rose by 5.6 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 5.5 percent, new non-residential construction (5.2%) and new residential construction (5.8%). The price of maintenance and repairs construction grew by 5.8 percent over the past year, non-residential maintenance and repairs (5.7%) and residential maintenance and repairs (6%). Meanwhile, the price of oriented strand board (OSB) rose by 6.3 percent, cement (3.3%), Gypsum (8.4%) and softwood plywood (27.4%), over the past 12 months.
Jing Fu, Ph.D. 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. and Ph.D. in Economics from the University of Kansas.