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 20.2 percent at a seasonally adjusted annual rate in June 2018 to 304,000, after a 6.7 percent increase in May. On a year-over-year basis, the June starts of five or more unit buildings were 15.3 percent below its June 2017 level.
NAHB’s Multifamily Production Index (MPI) remained at 53 in the first 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 0.1 percent in June on a seasonally adjusted basis, slower than the 0.2 percent increase in May. Over the month of June, the Energy Price Index decreased by 0.3 percent, after a 0.9 percent increase in May, while food prices increased by 0.2 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, the same increase as last month. 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 0.3 percent in June. 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 June, 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 remained unchanged at a seasonally adjusted annual rate to 620,000 units in June. Regionally, sales in the Midwest and West were unchanged. Sales in the Northeast increased by 10 percent in June, while sales in the South declined by 3.4 percent. The months’ supply of homes rose to 4.1 months in June, from 4.0 months in May. Median prices on condos and co-ops nationwide rose by 4.9 percent over the past year to $258,100 in June. Median prices increased by 2.2 percent in the Northeast, 3.5 percent in the Midwest, 0.2 percent in the South and 12.2 percent in the West.
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 June. 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, new non-residential construction (8.3%) and new residential construction (7.8%). The price of maintenance and repairs construction grew by 8.2 percent over the past year, non-residential maintenance and repairs (8.5%) and residential maintenance (7.8%). Meanwhile, the price of oriented strand board (OSB) rose by 22.9 percent, cement rose by 1.7 percent, Gypsum (2.6%) and softwood plywood (38.3%), 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.