September 2019

On a year-over-year basis, the September starts of buildings with five or more units were 5.8 percent below September 2018.

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 decreased by 28.3 percent at a seasonally adjusted annual rate in September 2019 to 327,000 after a 41.6 percent increase in August. On a year-over-year basis, the September starts of buildings with five or more units were 5.8 percent below its September 2018 level.

NAHB’s Multifamily Production Index (MPI) increased 16 points to 56 in the second 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) remained unchanged in September on a seasonally adjusted basis. Over the month of September, the Energy Price Index fell by 1.4 percent, after a 1.9 percent decline in August, while food prices increased by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent in September, after a 0.3 percent increase in August. Shelter prices, which are the largest consumer expenditure category, grew by 0.3 percent as rental prices, a component of the shelter index, grew by 0.4 percent in September. 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 increased by 0.2 percent over the month of September. 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 rose by 1.7 percent at a seasonally adjusted annual rate to 600,000 units in September. Regionally, sales in the West grew by 7.7 percent, while sales in the Northeast, Midwest and South remained unchanged. The months’ supply of homes decreased to 4.3 months in September, from 4.4 months in August. Over the past year, median prices on condos and co-ops nationwide rose by 4.5 percent to $248,600 in September. Median prices increased in the Northeast by 6.8 percent, the Midwest by 2.6 percent, South (6.0 percent) and West (0.7 percent).

Building Materials:

The price of inputs to construction industries rose by 0.4 percent on a not seasonally adjusted basis over the past 12 months ending in September. 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 0.3 percent, new non-residential construction climbed 0.5 percent and new residential construction rose by 0.2 percent. The price of maintenance and repairs construction remained unchanged over the past year. The price of inputs to non-residential maintenance and repairs fell by 0.2 percent while the price of inputs to residential maintenance grew by 0.2 percent over the past year. Meanwhile, the price of cement rose by 2.7 percent. Gypsum prices decreased by 8.0 percent and the price of softwood plywood fell by 24.6 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.

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