September 2020

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 fell by 14.7 percent at a seasonally adjusted annual rate in September 2020 to 295,000 after a 28.7 percent decline in August. On a year-over-year basis, the September starts of buildings with five or more units were 17.4 percent below its September 2019 level.      

NAHB’s Multifamily Production Index (MPI) increased by 10 to 37 in the second quarter of 2020. 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) increased by 0.2 percent in September on a seasonally adjusted basis. Over the month of September, the Energy Price Index rose by 0.8 percent, after a 0.9 percent increase in August, while food prices stayed unchanged. Excluding the volatile food and energy components, the “core” CPI increased by 0.2 percent in September, after a 0.4 percent increase in August. Shelter prices, which are the largest consumer expenditure category, rose by 0.1 percent as rental prices, a component of the shelter index, increased by 0.1 percent in September. Since the increase in rental prices was lower than the growth rate in overall inflation, as measured by the “core” CPI, then NAHB’s Real Rent Index fell by 0.1 percent over the month of September. Over the past year, NAHB’s Real Rent Index has risen by 1.0 percent.

Existing Condo Sales and Prices:

Sales of existing condominiums and cooperatives increased by 6.3 percent at seasonally adjusted annual rate of 670,000 units in September. Regionally, sales in the Northeast, South and West rose by 20.0 percent, 3.2 percent and 7.1 percent, respectively. Sales in the Midwest remained unchanged. The months’ supply of homes stayed at 4.0 months in September. Over the past year, median prices on condos and co-ops nationwide grew by 9.9 percent to $272,700 in September. Median prices in the Northeast, Midwest, South and West climbed by 7.2 percent, 8.4 percent, 11.3 percent and 10.4 percent, respectively.

Building Materials:

The price of inputs to construction industries rose by 3.8 percent on a not seasonally adjusted basis over the past 12 months ending in September. 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 3.7 percent. The price of inputs to new non-residential construction rose by 1.5 percent while the price of inputs to new residential construction climbed by 5.8 percent. The price of maintenance and repairs construction increased by 4.5 percent over the past year. The price of inputs to non-residential maintenance and repairs jumped by 3.7 percent while the price of inputs to residential maintenance climbed by 5.3 percent over the past year. Meanwhile, the price of cement rose by 1.7 percent. Gypsum prices increased by 0.5 percent and the price of softwood plywood surged by 62.8 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.