October 2020

On a year-over-year basis, the October starts of buildings with five or more units were 19.9 percent below its October 2019 level.

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 fell by 3.2 percent at a seasonally adjusted annual rate in October 2020 to 334,000 after a 4.5 percent increase in September. On a year-over-year basis, the October starts of buildings with five or more units were 19.9 percent below its October 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) remained unchanged in October on a seasonally adjusted basis. Over the month of October, the Energy Price Index rose by 0.1 percent, after a 0.8 percent increase in September, while food prices grew by 0.2 percent. Excluding the volatile food and energy components, the “core” CPI was unchanged in October, after a 0.2 percent increase in September. Shelter prices, which are the largest consumer expenditure category, rose by 0.1 percent as rental prices, a component of the shelter index, increased by 0.2 percent in October. 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 0.1 percent over the month of October. Over the past year, NAHB’s Real Rent Index has risen by 1.0 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 5.8 percent at seasonally adjusted annual rate of 730,000 units in October. Regionally, sales in the Northeast, Midwest and South rose by 8.3 percent, 12.5 percent and 6.1 percent, respectively. Sales in the West remained unchanged. The months’ supply of homes fell to 3.6 months in October. Over the past year, median prices on condos and co-ops nationwide grew by 10.3 percent to $273,600 in October. Median prices in the Northeast, Midwest, South and West climbed by 10.2 percent, 7.0 percent, 13.9 percent and 11.7 percent, respectively.

Building Materials:

The price of inputs to construction industries rose by 5.4 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 increased by 5.5 percent. The price of inputs to new non-residential construction rose by 2.2 percent while the price of inputs to new residential construction climbed by 8.2 percent. The price of maintenance and repairs construction increased by 6.1 percent over the past year. The price of inputs to non-residential maintenance and repairs jumped by 4.9 percent while the price of inputs to residential maintenance climbed by 7.7 percent over the past year. Meanwhile, the price of cement rose by 1.7 percent. Gypsum prices fell by 0.3 percent and the price of softwood plywood surged by 79.8 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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