This data is fresh from NAHB’s Eye on Housing
blog, and relates well to our discussion at last months Sales and Marketing Council education event.
The rental apartment market continued to be strong during the second quarter of 2015, as multifamily production levels remain elevated.
According to NAHB analysis of the most recent data from the Census Bureau and Department of Housing and Urban Development Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments in buildings with five or more units totaled 210,200 residences for the four quarter period ending with the first quarter of 2015, a 40% increase from the prior four quarters.
Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for first quarter completions (rented during the second quarter of 2015) were effectively unchanged from a year prior at 61%. Absorption rates for rental apartments rose coming out of the recession but have established a more stable range since 2011, a period during which completions have increased substantially.
In contrast, condo and co-op completions remain at historically low levels, with 1,300 for-sale multifamily homes (in 5+ unit properties) completed during the first quarter of 2015. The non-seasonally adjusted 3-month absorption rate for for-sale multifamily for condos completed during the first quarter and sold during the second quarter of 2015 held strong at 74%.
The SOMA data also reveal that for properties with five or more units, approximately 5,300 Low-Income Housing Tax Credit or other federally subsidized units were completed during the first quarter of 2015. Over the last four quarters, 27,300 LIHTC and other affordable housing units were completed (approximately 10% of total apartment completions).
The Bureau of Labor Statistics (BLS) released the Producer Price Indexes (PPI) for August. Inflation in prices received by producers (prior to sales to consumers) were unchanged in August following a 0.2% increase in July. Separately, a 0.4% increase in prices for services was offset by a 0.6% decline in prices for goods, driven mainly by falling gas prices. Excluding food and energy, goods prices were -0.2% lower in August.
Among building materials, softwood lumber prices partially reversed the 2.4% increase in July, declining 2.2% in August. Prices have hovered in this range since early 2014. Similarly, OSB price dropped 0.8% after a 1.0% increase in July. Overall, soft overseas demand has kept domestic supply at home placing downward pressure on prices.
Gypsum prices dropped another 0.9% in August, bringing the decline from a February peak to 6.5%. Gypsum prices are now slightly below the housing boom peak (although single family housing starts are just above one half of a healthier/lower pre-boom pace). But it’s approaching the end of the year and a recent tradition is entering its fifth year. Major producers of drywall and ceiling tiles (made of Gypsum) are announcing an array of price increases scattered through the second half of this year and 2016.
National Gypsum, USG, Armstrong, American Gypsum and CertainTeed/Saint-Gobain have all announced price increases, ranging from 5% to 10% now and another 10% next August, for wallboard and/or ceiling tiles, some effective as early as August 2015 and running through 2016.
It looks like recent gypsum price declines will be short lived.