June 2020

On a year-over-year basis, the June starts of buildings with five or more units were 2.5 percent below its June 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 rose by 18.6 percent at a seasonally adjusted annual rate in June 2020 to 350,000 after a 22.9 percent increase in May. On a year-over-year basis, the June starts of buildings with five or more units were 2.5 percent below its June 2019 level.      

NAHB’s Multifamily Production Index (MPI) fell by 22 to 27 in the first 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) rose by 0.6 percent in June on a seasonally adjusted basis. Over the month of June, the Energy Price Index increased by 5.1 percent, after a 1.8 percent decline in May, while food prices climbed by 0.6 percent. Excluding the volatile food and energy components, the “core” CPI grew by 0.2 percent in June, after a 0.1 percent drop in May. 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 0.1 percent in June. 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 0.1 percent over the month of June. Over the past year, NAHB’s Real Rent Index has risen by 2.0 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 29.4 percent at seasonally adjusted annual rate of 440,000 units in June. Regionally, sales in the South and the West rose by 43.8 percent and 42.9 percent, respectively, while sales in the Northeast and the Midwest remained unchanged. The months’ supply of homes dropped to 5.3 months in June. Over the past year, median prices on condos and co-ops nationwide grew by 1.4 percent to $262,700 in June. Median prices in the Northeast and Midwest decreased by 1.6 percent and 1.9 percent, respectively, while median prices in the South and the West rose 4.3 percent and 3.0 percent, respectively.

Building Materials:

The price of inputs to construction industries fell by 1.5 percent on a not seasonally adjusted basis over the past 12 months ending in June. 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 decreased by 1.5 percent. The price of inputs to new non-residential construction dropped by 2.0 percent while the price of inputs to new residential construction fell by 0.8 percent. The price of maintenance and repairs construction decreased by 1.4 percent over the past year. The price of inputs to non-residential maintenance and repairs fell by 1.9 percent while the price of inputs to residential maintenance dropped by 1.2 percent over the past year. Meanwhile, the price of cement rose by 0.2 percent. Gypsum prices increased by 0.8 percent and the price of softwood plywood decreased by 5.3 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.