May 2020

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 16.9 percent at a seasonally adjusted annual rate in May 2020 to 291,000 after a 33.8 percent decline in April. On a year-over-year basis, the May starts of buildings with five or more units were 33.1 percent below its May 2019 level.      

NAHB’s Multifamily Production Index (MPI) fell by 22 to 27 in the first quarter of 2020. 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 below 50 indicates that more respondents report conditions are getting worse than report conditions are improving.

CPI vs. Rent:

The headline Consumer Price Index (CPI) fell by 0.1 percent in May on a seasonally adjusted basis. Over the month of May, the Energy Price Index declined by 1.8 percent, after a 10.1 percent drop in April, while food prices increased by 0.7 percent. Excluding the volatile food and energy components, the “core” CPI decreased by 0.1 percent in May, after a 0.4 percent decline in April. Shelter prices, which are the largest consumer expenditure category, rose by 0.2 percent as rental prices, a component of the shelter index, climbed by 0.3 percent in May. Since the increase in rental prices was higher than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index rose by 0.3 percent over the month of May. Over the past year, NAHB’s Real Rent Index has risen by 2.2 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives fell by 12.8 percent at seasonally adjusted annual rate of 340,000 units in May. Regionally, sales decreased in the Northeast by 14.3 percent, Midwest (16.7 percent), South (11.1 percent) and West (12.5 percent). The months’ supply of homes increased to 6.6 months in May. Over the past year, median prices on condos and co-ops nationwide declined by 1.6 percent to $252,300 in May. Median prices decreased in the Northeast by 2.2 percent, Midwest (0.3 percent) and West (4.9 percent), while median prices in the South rose 1.4 percent.

Building Materials:

The price of inputs to construction industries fell by 3.2 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 decreased by 3.2 percent, new non-residential construction dropped by 3.9 percent and new residential construction fell by 2.3 percent. The price of maintenance and repairs construction decreased by 3.5 percent, non-residential maintenance and repairs fell by 4.1 percent and residential maintenance dropped by 3.2 percent over the past year. Meanwhile, the prices of cement fell by 0.9 percent, Gypsum by 0.5 percent and softwood plywood by 11.0 percent over the past 12 months.

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.