Market Pulse for May 2018
- Apr 19, 2018
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 declined by 28 percent at a seasonally adjusted annual rate in February 2018, to 317,000, after a 23.6 percent increase in January. On a year-over-year basis, the February starts of five or more unit buildings were 19.1 percent below its February 2017 level.
NAHB’s Multifamily Production Index (MPI) gained seven points to 53 in the fourth quarter of 2017. 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 February on a seasonally adjusted basis. Over the month of February, the Energy Price Index rose by 0.1 percent, slowed down from a 3 percent increase in January, and food prices were unchanged. Excluding historically volatile food and energy prices, “core” CPI rose by 0.2 percent, after the 0.3 percent increase in January. Shelter prices, which are the largest consumer expenditure category, grew by 0.2 percent as rental prices, a component of the shelter index, grew by 0.2 percent as well in February. Since the increase in rental prices is similar to the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index was unchanged over the month of February. Over the past year, NAHB’s Real Rent Index has risen by 1.7 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives fell by 6.5 percent at a seasonally adjusted annual rate to 580,000 units in February. Regionally, sales in the West increased by 7.1 percent to 150,000 units, while sales in the Northeast and South decreased by 16.7 percent to 100,000 units and 10.7 percent to 250,000 units, respectively. Sales in the Midwest were unchanged at the level of 80,000 units. The months’ supply of homes increased to 3.7 months in February, from 3.0 months in January. Median prices on condos and co-ops nationwide rose by 5.7 percent over the past year to $227,300 in February. Median prices in the Northeast increased by 6.8 percent, Midwest (2.9%), South (0.7%) and West (13.8%).
The price of inputs to construction industries rose by 4.4 percent on a not seasonally adjusted basis over the past 12 months ending in February. 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 4.3 percent, non-residential construction (4.1%) and residential construction (4.4%). The price of maintenance and repairs construction grew by 4.6 percent over the past year, while both the non-residential and residential maintenance and repairs increased by by 4.7 percent. Meanwhile, the price of oriented strand board (OSB) rose by 2.7 percent over the past 12 months, as well as cement (3.1%), Gypsum (8%) and softwood plywood (26.9%).
Jing Fu, Ph.D. is a Senior Economist at NAHB. She monitors developments in the economy to identify trends and issues related to the housing industry. She also assists in forecasting and analyzing the state and metropolitan area housing market, producing research and articles detailing sectors and the geography of the home building industry. Prior to joining NAHB, Jing worked at Thomson Reuters as a data specialist and has extensive knowledge and experience on quantitative research and large data set analysis. She holds an M.A. and Ph.D. in Economics from the University of Kansas.