December 2019

On a year-over-year basis, the December starts of buildings with five or more units were 74.6 percent above its December 2018 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 increased by 32.0 percent at a seasonally adjusted annual rate in December 2019 to 536,000 after a 1.9 percent decline in November. On a year-over-year basis, the December starts of buildings with five or more units were 74.6 percent above its December 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 0.2 percent in December on a seasonally adjusted basis. Over the month of December, the Energy Price Index climbed by 1.4 percent, after a 0.8 percent increase in November, while food prices increased by 0.2 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.1 percent in December, after a 0.2 percent increase in November. Shelter prices, which are the largest consumer expenditure category, grew by 0.2 percent as rental prices, a component of the shelter index, climbed by 0.2 percent in December. Since the increase in rental prices was slightly 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 December. 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 10.7 percent at a seasonally adjusted annual rate to 620,000 units in December. Regionally, sales grew in the Northeast by 9.1 percent, in the Midwest (14.3 percent), in the South (11.5 percent) and in the West (8.3 percent). The months’ supply of homes decreased to 3.4 months in December. Over the past year, median prices on condos and co-ops nationwide rose by 6.0 percent to $255,400 in December. Median prices increased in the Northeast by 4.3 percent, in the Midwest (8.1 percent), in the South (5.6 percent) and in the West (7.8 percent).

Building Materials:

The price of inputs to construction industries rose by 1.5 percent on a not seasonally adjusted basis over the past 12 months ending in December. 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 1.5 percent, new non-residential construction climbed by 2.1 percent and new residential construction rose by 0.9 percent. The price of maintenance and repairs construction grew by 1.5 percent over the past year, non-residential maintenance and repairs increased by 1.4 percent and residential maintenance grew by 0.9 percent over the past year. Meanwhile, the price of cement rose by 2.0 percent. Gypsum prices decreased by 5.2 percent and the price of softwood plywood fell by 13.4 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.