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 increased by 27.3 percent at a seasonally adjusted annual rate in August 2018 to 392,000, after a 2.5 percent decrease in July. On a year-over-year basis, the August starts of five or more unit buildings were 37.1 percent above its August 2017 level.
NAHB’s Multifamily Production Index (MPI) declined two points to 51 in the second 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) rose by 0.2 percent in August on a seasonally adjusted basis, the same increase as in July. Over the month of August, the Energy Price Index increase by 1.9 percent, after a 0.5 percent decrease in July, while food prices increased by 0.1 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, after the 0.2 percent increase in July. 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 0.4 percent in August. 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 August, increasing by 0.3 percent. Over the past year, NAHB’s Real Rent Index has risen by 1.4 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives were at a seasonally adjusted annual rate to 590,000 units in August, unchanged from last month. Regionally, sales in the Northeast and South increased by 10.0 percent and 3.7 percent, respectively, while sales in the West declined by 13.3 percent. Sales in the Midwest were unchanged. The months’ supply of homes rose to 4.5 months in August from 4.4 months in July. Median prices on condos and co-ops nationwide rose by 2.0 percent over the past year to $244,500 in August. Median prices increased in the Northeast (7.1%), Midwest (0.2%) and West (1.7%), while median prices in the South decreased by 1.9 percent.
The price of inputs to construction industries rose by 6.2 percent on a not seasonally adjusted basis over the past 12 months ending in August. 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 6.2 percent, new non-residential construction (6.4%) and new residential construction (6.1%). The price of maintenance and repairs construction grew by 6.2 percent over the past year, non-residential maintenance and repairs (6.5%) and inputs to residential maintenance (6.1%). Meanwhile, the price of oriented strand board (OSB) rose by 7.4 percent, cement (1.9%), Gypsum (8.2%) and softwood plywood (20.6%) over the past 12 months.
For more information on the NAHB Multifamily program, please visit NAHB Multifamily.
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.