November 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 rose by 8.0 percent at a seasonally adjusted annual rate in November 2020 to 352,000 after a 2.7 percent decline in October. On a year-over-year basis, the November starts of buildings with five or more units were 16.0 percent below its November 2019 level.      

NAHB’s Multifamily Production Index (MPI) increased by 11 to 48 in the third 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 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) slightly increased by 0.2 percent in November on a seasonally adjusted basis. Over the month of November, the Energy Price Index rose by 0.4 percent, after a 0.1 percent increase in October, while food prices fell by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.2 percent in November, after being unchanged in October. Shelter prices, which are the largest consumer expenditure category, rose by 0.1 percent as rental prices, a component of the shelter index, remained unchanged in November. Since the increase in rental prices was lower than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index fell by 0.2 percent over the month of November. Over the past year, NAHB’s Real Rent Index has risen by 0.8 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives fell by 2.7 percent at seasonally adjusted annual rate of 710,000 units in November. Regionally, sales in the Midwest and South declined by 11.1 and 2.9 percent, respectively. Sales in the Northeast and West stayed unchanged. The months’ supply of homes fell to 3.4 months in November. Over the past year, median prices on condos and co-ops nationwide grew by 9.5 percent to $271,400 in November. Median prices in the Northeast, Midwest, South and West climbed by 4.7 percent, 4.8 percent, 12.2 percent and 4.9 percent, respectively.

Building Materials:

The price of inputs to construction industries rose by 4.6 percent on a not seasonally adjusted basis over the past 12 months ending in November. 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 4.5 percent. The price of inputs to new non-residential construction rose by 2.3 percent while the price of inputs to new residential construction climbed by 6.6 percent. The price of maintenance and repairs construction increased by 5.1 percent over the past year. The price of inputs to non-residential maintenance and repairs jumped by 4.1 percent while the price of inputs to residential maintenance climbed by 6.4 percent over the past year. Meanwhile, the price of cement rose by 1.8 percent. Gypsum prices increased by 4.0 percent and the price of softwood plywood surged by 59.9 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.