Multi Housing News July 2012 : Page 14
market pulse Multifamily Starts Percentage Change Month-over-Month 250,000 Finished Goods vs. Construction Materials and Components 1.5% 1.2% 200,000 Units 178,000 1.0% 0.6% 0.9% Finished Goods 150,000 124,000 0.5% 0.0% -0.5% -1.0% 0.3% Materials & Components for Construction 100,000 50,000 Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. ’11 ’12 Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. ’12 ’11 Percentage Change Month-over-Month Multifamily Starts: The seasonally adjusted annual rate (SAAR) of starts in buildings with fi ve or more units declined 20 percent during March, falling to 178,000 units, according to the latest release from the Census Bureau. Nonetheless, the long-term trend generally re-mains positive as the fi ve-plus starts rate is 9 percent above its year-ago level, and the 3-month moving average is close to post-recession highs. The rate at which new fi ve-plus permits were issued registered a strong 24 percent increase to 262,000 (SAAR) in March, marking the fi fth consecutive month that the fi ve-plus permit rate has been above 200,000. Improvement in the permit rate since 2010 suggests that multifamily production will remain relatively healthy going forward. At the other end of the production pipeline, the rate of fi ve-plus comple-tions increased 4 percent in March to 146,000, but this level is quite low. This number will rise over the near term as the level of fi ve-plus units under construction has been steadily climbing and has remained above 190,000 units for the last three months. Building Materials 6.0% 4.0% 2.8 2.1 2.2 2.7 2.0 1.2 1.3 0.6 5.9 5.1 4.6 2.0% 0.0% -0.3 -0.4 -0.6 -2.0% -2.4 -4.0% Jan. ’12 Feb. ’12 Mar. ’12 Interest Rates 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 3-Month Libor 0.28% 3-Month Libor 0.47% 10-Year Treasury 3.46% Cement Gypsum Softwood Lumber Plywood Steel Prime Rate 3.25% 10-Year Treasury 2.17% Prime Rate 3.25% Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. ’11 ’12 Building Materials: Gypsum prices continue to be the main driver for residential construction cost increases in 2012, increasing an ad-ditional 2.2 percent during March. This comes on the heels of 5.9 per-cent and 5.1 percent increases during the fi rst two months of 2012. Since bottoming out in February 2011, gypsum prices have increased nearly 18 percent. Lumber prices also have increased appreciably. In addition to these increases, rising gasoline prices have helped push the aggregate index for residential construction up 1.1 percent for the month. This brings residential construction costs to 13 percent above their cyclical lows that occurred roughly midway through 2009. By contrast, steel and cement put downward pressure on residential construction costs, as these registered declines of 0.6 percent and 0.4 percent, respectively. 14 July 2012 | Multi-Housing News
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