14 July 2015 | Multi-Housing News

Source: Commentary and Data supplied by Michael Neal, senior economist, National Association of Home Builders.

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 join-ing NAHB, he worked at the Joint Economic Committee of the U.S. Congress, the Federal Reserve, the Con-gressional Budget Office and Goldman, Sachs & Co.

Multifamily Starts: Measured at a seasonally adjusted annual rate, housing starts of buildings with five or more units fell by 7.1 percent over the month of March 2015 to 287,000. The number of housing starts of buildings with five or more units in February 2015 was revised up from 297,000 to 309,000. March 2015 is the first month that housing starts of buildings with five or more units was less than 300,000 since June 2014. Prior to June 2014, housing starts of buildings with five or more units was last under 300,000 in September 2013. The monthly de-cline that was recorded in March 2015 extends the decrease that took place between January and February 2015. Since January 2015, hous-ing starts of buildings with five or more units has declined by 22.0 per-cent. In tandem, the three-month moving average, which smoothes the underlying volatility in the data, fell by 6.9 percent over the same two-month period. However, despite this two-month decrease, the three-month moving average remains above the 300,000 mark. Moreover, the three-month moving average of housing starts of buildings with five or more units, 321,333, exceeds the average level between the years 2000 and 2007, 301,260, by 6.7 percent.

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Per

cent

age

Cha

nge

Mon

th-o

ver-

Mon

thMay Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.

’15Feb. Mar.Apr.

’14

Rent 3.8%

CPI 2.3%

Rent3.7%

CPI2.9%

CPI vs. Rent: Following three consecutive month-over-month declines, the seasonally adjusted Consumer Price Index—Urban Consumer (CPI), rose for the second consecutive month by 0.2 percent in March 2015. The month-over-month increase in the CPI partially reflected rising ener-gy prices. Following seven consecutive monthly declines, energy prices rose for the second consecutive month by 1.1 percent in March 2015. However, energy prices remain 18.3 percent below their level from one year ago. Food prices declined over March 2015, by 0.2 percent. Ex-cluding the more volatile energy and food prices, “core-CPI” rose by 0.2 percent over the month of March 2015. Shelter prices, which account for the largest portion of consumer expenditures, rose by 0.3 percent as rental prices increased by 0.3 percent. Since rental prices rose faster than overall inflation, as measured by core-CPI, then real rental prices also grew. NAHB’s Real Rent Index rose by 0.1 percent, over the month of March 2015. Over the year, the Real Rent Index grew 1.7 percent.

CPI vs. Rent

news & notes

Market PulseMarket Pulse section compiled by Keat Foong, executive editor. To comment, email kfoong@multi-housingnews.com.

250,000

300,000

350,000

400,000

450,000

Uni

ts

May Jun. Aug. Sep.Jul. Oct. Nov. Dec. Jan.’15

Feb. Mar.Apr.’14

405,000

287,000

Multifamily Starts

MHN ONLINEFor more market statistics and reports,

visit www.multi-housingnews.com

www.multi-housingnews.com | July 2015 15

0.0%

1.0%

2.0%

3.0%

4.0%

May Jun. Aug. Sep. Oct. Nov. Dec. Feb.Jan.’15

Mar.Apr.’14

Jul.

3-Month Libor0.23%

3-Month Libor0.27%

10-YearTreasury2.71%

Prime Rate 3.25%

10-YearTreasury

2.04%

Prime Rate3.25%

Interest Rates

Ind

ex

Apr.’14

May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.’15

Feb. Mar.

0.87

0.91

0.8

0.9

1.0

NAHB/First American Leading Markets Index*

*An index value above 1.0 indicates the market has advanced beyond the previous sustainable level of economic activity.

Per

cent

age

Cha

nge

Mon

th-o

ver-

Mon

thJan. ’15 Feb. ’15

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Cement

Gypsum

Softwood Lumber

Plywood

Steel

3.6

4.33.9

0.0 0.2

2.0

-0.3

-1.2-1.6

-2.5

-1.8

-3.2

-1.6

-0.5

-1.9

Mar. ’15

Building Materials

Building Materials: The price of inputs to construction fell by 3.6 per-cent on a not seasonally adjusted basis over the 12 months ending in March 2015. 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 3.6 percent. The price of inputs to new non-residential construction fell by 4.5 percent while the price of inputs to new residential construction dropped 2.4 percent. Meanwhile, the price of maintenance and repairs fell by 4.3 percent over the past year. The price of inputs to non-resi-dential maintenance and repairs decreased 4.3 percent while the price of inputs to residential maintenance and repairs declined by 4.4 percent. Changes in the prices of individual building materials varied. The price of cement rose by 9.5 percent, and the price of softwood plywood rose by 7.3 percent. However, the price of gypsum products fell by 1.0 percent and the price of oriented strand board (OSB) declined by 12.1 percent.

$180,000

$190,000

$200,000

$210,000

$220,000

Apr.’14

May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.’15

Feb. Mar.

$205,300$201,400

Existing Condo Sales and Prices: Existing condo and co-op sales, measured at a seasonally adjusted annual rate, rose by 7.1 percent over the month of March 2015 to 600,000 units. All regions recorded month-over-month gains with the Northeast rising by 11.1 percent, the Midwest surging by 14.3 percent, the South expanding by 12.0 percent and the West increasing by 7.7 percent. In addition, the March 2015 existing con-do and co-op inventory level, 257,000, exceeded its February 2015 level, 238,000, by 8.0 percent. However, since the existing condo and co-op sales pace, 11.1 percent, exceeded the change in the inventory of condos and co-ops, 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, declining by 3.8 percent over the month to 5.1 months. Median existing condo and co-op sales prices rose by 1.6 percent on a not seasonally adjusted basis over the past year to $201,400.

Existing Condo Median Sales Price

16 July 2015 | Multi-Housing News

news & notes

Unemployment RateSeasonally adjusted, 16 years and over

Source: U.S. Bureau of Labor Statistics

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

Apr. Apr.May Jul.Jun. Sep.Aug. Oct.

5.5% 5.4%

Nov. Dec. Mar.Feb.Jan.20152014

Per

cent

age

of

Une

mp

loye

d

Apartment Equity REITs Performance Period to Date Performance (%)

Dividend Yield (5-15-15) Price Return (5-15-15) 3.13 0.72

Total Returns (as of 5-15-15)

5-15-15 Q-T-D Y-T-D 0.72 -1.73 5.93

Compound Annual Total Returns Through Prior Month’s Close

1-Year 5-Year 10-Year 24.52% 14.08% 11.55%

Source: National Association of Real Estate Investment Trusts

Apartment Total ReturnsInternal Rate of Return on Investment

Commercial Real Estate Total ReturnsInternal Rate of Return on Investment

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Inve

stm

ent

Ret

urns

2012 2014

Q1 Q1Q3Q3 Q1 Q3 Q1 Q3

2.482.21

2.41 2.532.77 2.85

3.603.48

2.79 2.772.43

2.812.57 2.50 2.48

2011 2013 2015

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Inve

stm

ent

Ret

urns 3.30

2.962.59 2.68

2.342.54 2.57 2.59 2.53

2.742.91

2.63

3.04

3.57

2.87

2011 2012 2014

Q1 Q1Q3Q3 Q1 Q3 Q1 Q3

2013 2015

Source: National Council of Real Estate Investment Fiduciaries

Multifamily MortgageDebt Outstanding

Sources: Mortgage Bankers Association, Federal Reserve Board of Governors, Wells Fargo Securities L.L.C., Intex Solutions Inc. and FDIC

CMBS, CDO andother ABS Issues

State and Local GovernmentRetirement Funds

Private Pension Funds

Non�nancial CorporateBusiness

Federal Government

2014Q4

Bank and Thrift

Agency and GSEPortfolios and MBS

State and LocalGovernment

Life Insurance Companies

Nonfarm NoncorporateBusiness

Billions

REITs

Finance Companies

2013Q4

$0 $100 $200 $300 $400 $500

412.2390.6

262.8

75.2

83.9

53.6

15.0

2.02.0

3.32.1

3.52.6

0.40.4

297.4

74.0

84.0

56.5

15.6

13.213.8

1.92.2

www.multi-housingnews.com | July 2015 17

Market Pulse section compiled by Keat Foong, executive editor. To comment, email kfoong@multi-housingnews.com.

Top 10 Multifamily Sales: New York CityRecorded in April 2015

Source: PropertyShark

ADDRESS BOROUGH SALE PRICE SALE DATE RECORDED DATE

311-329 West 50th St. Manhattan $72,000,000 23-Mar-15 2-Apr-15

207 West 79th St. Manhattan $39,000,000 9-Apr-15 24-Apr-15

521-523 Broome St. 558 Broome St.

Manhattan

$35,658,069 1-Oct-14 14-Apr-15

1 Watts St. 156-158 Sullivan St.

356 Bowery St. 1101 Second Ave.

1130 First Ave.

586-588 Third Ave. Brooklyn

51-10 Vernon Blvd. 24-60 32nd St. Queens

440 West 41st St. Manhattan $27,816,750 1-Apr-15 24-Apr-15

14-16 Fifth Ave. Manhattan $27,500,000 6-Feb-15 7-Apr-15

204-210 West 108th St. Manhattan $27,500,000 1-Apr-15 23-Apr-15

520 East 21st St. Brooklyn $26,500,000 30-Mar-15 22-Apr-15

117 Elizabeth St. 115 Elizabeth St.Manhattan $26,000,000 19-Mar-15 16-Apr-15

113 Elizabeth St.

238 East 33rd St. Manhattan $25,816,322 27-Mar-15 14-Apr-15

1777 Grand Concourse Bronx $25,600,000 26-Mar-15 9-Apr-15t

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