July 2017

Commentary and data were supplied by a senior economist with the National Association of Home Builders (NAHB).

Market Pulse section compiled by IvyLee Rosario. To comment, email [email protected].

Multifamily Starts:1017_MP_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, measured at a seasonally adjusted annual rate, declined by 17.1 percent in July 2017 to 287,000, following the 8.1 percent increase in June. Over the past 12 months, starts of five or more unit buildings declined 35.2 percent in July, the fifth consecutive decline.

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.

1017_MP_cpiCPI vs. Rent:

The headline Consumer Price Index (CPI) rose 0.1 percent in July on a seasonally adjusted basis. Over the month of July, the Energy Price Index decreased by 0.1 percent, following the two consecutive declines in May and June. Meanwhile, food prices increased 0.2 percent in July, after being unchanged in June. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, the fourth consecutive month with a 0.1 percent increase. Shelter prices, which are the largest consumer expenditure category, grew by 0.1 percent as rental prices, a component of the shelter index, grew by 0.2 percent in July. 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 July, 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:1017_MP_condo

Sales of existing condominiums and cooperatives decreased by 4.8 percent at a seasonally adjusted annual rate to 600,000 units in July 2017. Regionally, sales in the Northeast, Midwest and South decreased by 16.7 percent, 12.5 percent and 3.6 percent, respectively. Meanwhile, sales in the West rose by 6.7 percent. The months’ supply of homes increased to 4.5 months. Median prices on condos and co-ops nationwide rose by 5.3 percent over the past year to $239,800 in July. Median prices in the South increased by 7.7 percent while price growth in the other three regions of the country lagged the nationwide rate. Condo and co-op prices in the Northeast, Midwest and West all grew by 4.9 percent.

1017_MP_buildingBuilding Materials:

The price of inputs to construction rose by 2.5 percent on a not seasonally adjusted basis over the twelve months ending in July 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 2.5 percent, inputs to new non-residential construction (2.4%) and inputs to new residential construction (2.5%). The price of maintenance and repairs construction grew by 2.5 percent over the past year, inputs to non-residential maintenance and repairs (2.5%) and inputs to residential maintenance and repairs (-2.7%). Meanwhile, the price of oriented strand board (OSB) grew by 18.1 percent, cement (4.8%), Gypsum (9.9%) and softwood plywood (1.8%), over the past 12 months.

1017_MP_interestJing 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.

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