Market Pulse for September 2016

Market Pulse section compiled by Suzann Silverman. To comment, email ssilverman@cpexecutive.com.

Multifamily Starts:916_MP_starts

Housing starts of buildings with five or more units rose by 1.6 percent over the month of June 2016 to a seasonally adjusted annual rate of 392,000. The month-over-month increase in June is the third consecutive month of recorded gains. Over this three-month period, the months covering the second quarter of 2016, starts of buildings with five or more units rose by 11.0 percent and the number of starts averaged 385,000 per month. The average number of housing starts of buildings with five or more units registered in the second quarter of 2016 was 10.7 percent above the 348,000 starts in the first quarter of 2016, reversing three consecutive quarterly declines. However, it was 11.1 percent below its level from one year ago.

916_MP_cpiCPI vs. Rent:

Over the month of June 2016, there was little change in the broad measures of inflation. Headline consumer prices (CPI) rose by a seasonally adjusted 0.2 percent in June 2016, similar to its growth rate in May 2016. Food prices fell for the second consecutive month while energy prices rose again. Over June 2016, food prices fell by 0.1 percent after declining by 0.2 percent in May 2016. Following a 1.2 percent increase in May, energy prices in June rose by 1.3 percent. Excluding the more volatile prices of energy and food, “core-CPI” rose by 0.2 percent over the month of June, similar to its level of growth in May. Shelter prices, which account for the largest portion of consumer expenditures, rose by 0.3 percent in June, 0.1 percent percentage point slower than its growth rate in May. However, rental prices, a component of overall shelter prices, grew by 0.4 percent over the month, matching its monthly rate of growth in May. Since the increase in rental prices exceeded the monthly rise in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index rose, again increasing by 0.2 percent on a monthly basis. Over the past 12 months, the Real Rent Index has risen by 1.5 percent, similar to the 12-month rate of growth recorded in May.

Existing Condo Sales and Prices:916_MP_condo

Sales of existing condos and co-ops, measured on a seasonally adjusted annual rate, grew by 3.2 percent in June. The month-over-month increase in existing condo and co-op sales reflects growth in the Northeast, 9.1 percent, and in the South, 3.6 percent. In both the Midwest and the West, sales growth was unchanged. While the sales rose nationwide, the inventory of existing condos and co-ops shrank by 2.6 percent over the month. There are an estimated 239,000 condos and co-ops in inventory. Since the pace of inventory growth was less than the rate of increase in sales, then the months’ supply, which represents the number of months it would take to exhaust the existing condo and co-op inventory at the current sales pace, fell, dropping 6.4 percent over the month to 4.4 months. Median existing condo and co-op sales prices rose by 3.2 percent on a not seasonally adjusted basis over the past year to $231,600.

916_MP_buildingBuilding Materials:

The price of inputs to construction fell by 0.9 percent on a not seasonally adjusted basis over the 12 months ending in June 2016. 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 eased by 0.8 percent. The price of inputs to new non-residential construction fell by 1.5 percent while the price of inputs to new residential construction dropped 0.2 percent. Meanwhile, the price of maintenance and repairs construction fell by 1.5 percent over the past year. The price of inputs to non-residential maintenance and repairs decreased by 1.8 percent while the price of inputs to residential maintenance and repairs declined by 1.0 percent. Twelve-month changes in the prices of individual building materials varied. The price of oriented strand board (OSB) grew by 26.9 percent, the price of cement rose by 5.2 percent, and gypsum prices increased by 1.6 percent. However, the price of softwood plywood declined by 9.2 percent.

916_MP_interest

 

 

 

 

 

 

Commentary and data were supplied by Michael Neal, a senior economist with the National Association of Home Builders (NAHB).

Michael Neal is a senior economist with the National Association of Home Builders (NAHB). In this capacity, he monitors macroeconomic and financial issues that affect the U.S. and local housing markets. Prior to joining NAHB, he worked at the Joint Economic Committee of the U.S. Congress, the Federal Reserve, the Congressional Budget Office and Goldman, Sachs & Co.