May 2019

Multifamily 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 increased by 13.8 percent at a seasonally adjusted annual rate in May 2019 to 436,000 after a 6.1 percent increase in April. On a year-over-year basis, the May starts of five or more unit buildings were 13.8 percent above its May 2018 level.      

NAHB’s Multifamily Production Index (MPI) dropped seven points to 40 in the first quarter of 2019. 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) increased by 0.1 percent in May on a seasonally adjusted basis. Over the month of May, the Energy Price Index fell by 0.6 percent, after a 2.9 percent increase in April, while food prices rose by 0.3 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent in May, the same increase as in April. Shelter prices, which are the largest consumer expenditure category, grew by 0.2 percent as rental prices, a component of the shelter index, grew by 0.2 percent in May. Since the increase in rental prices exceeded the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index increased by 0.1 percent over the month of May. Over the past year, NAHB’s Real Rent Index has risen by 1.7 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives rose by 1.7 percent at a seasonally adjusted annual rate to 590,000 units in May. Regionally, sales in the Northeast, Midwest and South remained unchanged, while sales in the West grew by 7.7 percent. The months’ supply of homes decreased to 4.5 months in May, from 4.6 months in April. Over the past year, median prices on condos and co-ops nationwide rose by 5.4 percent to $257,100 in May. Median prices increased in the Northeast by 5.6 percent, Midwest (5.8%), South (4.2%) and West (3.9%).

Building Materials:

The price of inputs to construction industries rose by 1.3 percent on a not seasonally adjusted basis over the past 12 months ending in May. 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 1.3 percent, new non-residential construction (1.8%) and new residential construction (1.0%). The price of maintenance and repairs construction grew by 1.0 percent, non-residential maintenance and repairs (1.1%) and residential maintenance (1.3%) over the past year. Meanwhile, the price of cement rose by 2.5 percent. Gypsum prices decreased by 6.3 percent and the price of softwood plywood decreased by 17.0 percent over the past 12 months. Furthermore, the price of oriented strand board (OSB) was estimated to fall 1.3 percent monthly in May, based on the data from Random Lengths.

Fan-Yu Kuo is an Economist at NAHB where she conducts economic research related to macroeconomics and forecasting. She also assists in economic and housing data updates. Prior to NAHB, Fan-Yu was a Research Assistant at the Academia Sinica. She holds an M.A. in International Economics and Finance from Johns Hopkins University and another M.A. in International Political Economy from King’s College London.