May Market Pulse

Commentary and Data Supplied by Dean Crist, Senior Economist, National Association of Home Builders Apartment Starts: The roller coaster continues as a steep drop in starts (at a seasonally-adjusted annual rate) for March more than offset February’s gain. While for-rent and for-sale multifamily aren’t differentiated in the monthly data, a majority of current starts are rentals.Rent Changes: Rent growth has slowed in comparison to the entire consumer price index, but that’s to be expected, since the entire CPI includes items such as gasoline, food and beverage costs, and medical care—all of which are rising faster than rents.Interest Rates: The Prime rate, 10-year Treasuries, and LIBOR continued their declines in March, which was predicted in last month’s Market Pulse, reinforcing the weakness in the overall economy. However, low rates are only good news for the rapidly shrinking number of people and companies that the banks are willing to lend to.Existing Condo Prices: Existing condo prices came in at $219,400 for units sold in March 2008. The current prices represents a decline of 2.8 percent from one year earlier compared to the 4.9 percent year-over-year gain registered in February.Building Materials: Cement and softwood lumber prices dropped slightly, reflecting the continuing slowdown in new construction in all categories. Plywood is up slightly, and gypsum more so, but prices for those categories — materials that are also widely used in remodeling — have been less volatile in recent months. But the cost of finished goods continues to rise, as does the composite category of materials and components of construction.Sources for Starts, Rent Changes, Interest Rates: National Association of Home Builders.