MultiFamily Market Outlook - 05/29/2003 (Plain Text Version)

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In this issue:
Multifamily Indicators — First Quarter 2003 Update
Starts Keep Climbing
Real Rents Still Trailing Inflation
Economic Forecast
MFSI Shows Sizable Increase

Real Rents Still Trailing Inflation

Residential rents in March grew more slowly than overall inflation for the second month in a row, according to data from the Bureau of Labor Statistics Consumer Price Index (CPI). During the first part of 2003, several events interrupted the foreign supply of oil and gasoline. Combined with uncertainty about oil production in Iraq, that interruption drove energy prices in some parts of the United States to 12-year highs.

Largely as a result of this, the overall CPI has posted strong seasonally adjusted annual rate increases of at least 4% each month during the first quarter of 2003. Meanwhile, the CPI sub-index measuring the rent of primary residences grew at less than 3% in February and March — tied for the lowest one-month increase in the rent sub-index since 1999. That combination has pulled the real rent index from its January peak of 107.5 back down to 106.9, reversing the momentum that had built up during 2002.