Market Pulse for March

Commentary and Data Supplied by Dean Crist, Senior Economist, National Association of Home BuildersBuilding Materials Cement, which dropped in price for nine of the last 13 months, is up by 1.2 percent. And gypsum continued its almost uninterrupted rise in price – seven of the last eight months – with another 1 percent hike. Gypsum prices have been surprising in the last year, with big bumps – a 4.4 percent rise last August, and 3.5 percent last April. Both these materials may see further rises as demand from federal stimulus-funded construction kicks in later in the year. Prices for softwood lumber and plywood both continue to fall, and such price drops will likely continue until the residential construction market begins to turn around.Median Condo Sale PriceThe median condo price continues to fall. The preliminary figure for January, $174.4, is a 4 percent drop from the previous month. The more relevant numbers to owners, however, is that this January’s median price represents a 21 percent drop from January 2008’s price of $219,600, and a 24 percent drop from the high point reached last July, 2007. Multifamily StartsThe preliminary starts number for January ’09 of 114,000 is the lowest monthly number since January 1994. It is well below the number of units that would represent a level that we have come to view as necessary for replacement of units leaving the supply, plus what is needed to accommodate new households — 300,000 or thereabouts. Permit numbers for that month also fell for multifamily — a drop of 1.6 percent. That may indicate a future drop in starts in the months to come. Interest RatesThe Prime rate continued the slide that began four months ago — it’s dropped about a half-point every month since October ’08. Rates for 10-Year Treasuries remained steady, with a drop of only a tenth of a point. And the LIBOR, which spent the first three quarters of last year moving in tiny increments between the mid-twos and low threes, has been all over the map — jumping to 4.06 in October and falling from there to its current 1.21 level. That’s good news for people whose adjustable mortgage loans are pegged to the LIBOR — the London Interbank Offered Rate — but bad news for anyone who wants to see banks motivated to return to lending to each other, or to anyone else.