November 2019

On a year-over-year basis, the November starts of buildings with five or more units were 4.4 percent above its November 2018 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 increased by 2.3 percent at a seasonally adjusted annual rate in November 2019 to 404,000 after a 11.9 percent increase in October. On a year-over-year basis, the November starts of buildings with five or more units were 4.4 percent above its November 2018 level.      

NAHB’s Multifamily Production Index (MPI) dropped seven points to 49 in the third quarter of 2019. 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 0.3 percent in November on a seasonally adjusted basis. Over the month of November, the Energy Price Index climbed by 0.8 percent, after a 2.7 percent increase in October, while food prices increased by 0.1 percent. Excluding the volatile food and energy components, the “core” CPI rose by 0.2 percent in November, after a 0.2 percent increase in October. Shelter prices, which are the largest consumer expenditure category, grew by 0.3 percent as rental prices, a component of the shelter index, climbed by 0.3 percent in November. Since the increase in rental prices was the same as the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index remained unchanged over the month of November. Over the past year, NAHB’s Real Rent Index has risen by 1.3 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives fell by 5.1 percent at a seasonally adjusted annual rate to 560,000 units in November. Regionally, sales in the South and West declined by 7.1 percent and 7.7 percent respectively, while sales in the Northeast and Midwest stayed the same. The months’ supply of homes decreased to 4.1 months in November. Over the past year, median prices on condos and co-ops nationwide rose by 4.5 percent to $248,200 in November. Median prices increased in the Northeast by 7.2 percent, in the Midwest by 3.7 percent, in the South by 2.9 percent and in the West by 6.6 percent.

Building Materials:

The price of inputs to construction industries rose by 0.2 percent on a not seasonally adjusted basis over the past 12 months ending in November. 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 0.2 percent, new non-residential construction climbed by 0.6 percent and new residential construction declined by 0.2 percent. The price of maintenance and repairs construction grew by 0.1 percent over the past year, non-residential maintenance and repairs fell by 0.1 percent and residential maintenance remained unchanged over the past year. Meanwhile, the price of cement rose by 2.1 percent. Gypsum prices decreased by 4.8 percent and the price of softwood plywood fell by 16.6 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.