October 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 6.8 percent to a seasonally adjusted annual rate in October 2019 to 362,000 after a 24.8 percent decline in September. On a year-over-year basis, the October starts of buildings with five or more units were 10.7 percent above its October 2018 level.      

NAHB’s Multifamily Production Index (MPI) dropped seven points to 49 in the third 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) rose by 0.4 percent in October on a seasonally adjusted basis. Over the month of October, the Energy Price Index climbed by 2.7 percent, after a 1.4 percent decline in September, while food prices increased by 0.2 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.2 percent in October, after a 0.1 percent increase in September. 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 0.1 percent in October. 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 remained unchanged over the month of October. Over the past year, NAHB’s Real Rent Index has risen by 1.4 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives remained unchanged at a seasonally adjusted annual rate to 590,000 units in October. Regionally, sales in the South grew by 3.7 percent, while sales in the West fell by 7.1 percent. Sales in the Northeast and Midwest stayed the same. The months’ supply of homes remained at 4.4 months in October. Over the past year, median prices on condos and co-ops nationwide rose by 5.6 percent to $248,500 in October. Median prices increased in the Northeast by 4.2 percent, Midwest by 6.5 percent, South (5.5 percent) and West (6.4 percent).

Building Materials:

The price of inputs to construction industries fell by 0.5 percent on a not seasonally adjusted basis over the past 12 months ending in October. 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 declined by 0.4 percent, new non-residential construction decreased by 0.3 percent and new residential construction declined by 0.5 percent. The price of maintenance and repairs construction slumped by 0.5 percent over the past year, non-residential maintenance and repairs fell by 0.8 percent and residential maintenance sank by 0.3 percent over the past year. Meanwhile, the price of cement rose by 2.4 percent. Gypsum prices decreased by 7.1 percent and the price of softwood plywood fell by 23.9 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.