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 3.1 percent at a seasonally adjusted annual rate in July 2018 to 303,000, after a 22.4 percent decrease in June. On a year-over-year basis, the July starts of five or more unit buildings were 9.6 percent below its July 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 July on a seasonally adjusted basis, faster than the 0.1 percent increase in June. Over the month of July, the Energy Price Index decreased by 0.5 percent, after a 0.3 percent decrease in June, while food prices increased by 0.1 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, the same increase as in May and June. 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 0.3 percent in July. 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 July, increasing by 0.1 percent. Over the past year, NAHB’s Real Rent Index has risen by 1.3 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives declined by 4.8 percent at a seasonally adjusted annual rate to 590,000 units in July. Regionally, sales declined in the Northeast by 9.1 percent, Midwest by 12.5 percent and South by 3.6 percent, while sales in the West were unchanged. The months’ supply of homes rose to 4.3 months in July, from 4.1 months in June. Median prices on condos and co-ops nationwide rose by 3.2 percent over the past year to $248,100 in July. Median prices increased in the Northeast by 5.6 percent, Midwest by 1.2 percent and West by 4 percent, prices in the South decreased by 2.1 percent.
The price of inputs to construction industries rose by 8.1 percent on a not seasonally adjusted basis over the past 12 months ending in July. 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 8.1 percent, non-residential construction climbed 8 percent and residential construction rose by 8.1 percent. The price of maintenance and repairs construction grew by 8.2 percent, non-residential maintenance and repairs rose by 8.5 percent and residential maintenance rose by 7.8 percent over the past year. Meanwhile, the price of oriented strand board (OSB) rose by 30.2 percent, cement rose by 2.3 percent, Gypsum prices increased by 4.1 percent and the price of softwood plywood climbed 31.3 percent 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.