MultiFamily Market Outlook - 10/17/2006 (Plain Text Version)

View Graphical Version | Subscribe to NAHB Publications | Email our Editor...
NAHB Home Page| Browse other NAHB e-publications |Search back issues

In this issue:
Apartments Have Positive Impact on Property Appreciation Rates
What Looks Like Rising Starts May Not Be, Really
Real Rents on an Modestly Upward Track
Gross Domestic Product and Job Creation Slowing
Multifamily Stocks Continue Record-Breaking Performance

Real Rents on an Modestly Upward Track

The real rent index edged back up in August. After inching down from 107.0 to 106.9 in July, the index—which adjusts changes in residential rents for overall inflation using information from the Consumer Price Index (CPI) series—increased to 107.1.

The components of the change break down as follows: The "rent of primary residence" sub-index of the CPI increased at a fairly healthy (seasonally adjusted annual) rate of 4.3%t during the month, in line with its average performance since March. The overall CPI, meanwhile, increased at a relatively modest rate of 3.0%.

Based on seasonally adjusted Consumer Price Indices; U.S. Department of Labor, Bureau of Labor Statistics. The annual rates indicate what the percentage change would be if the current monthly rate were sustained over a 12-month period. The real rent index is the CPI for rent of primary residence divided by the CPI for all items and scaled so that January 1995 is 100.

Monthly fluctuations of the CPI often are driven by the volatility of energy prices. In August, prices for both energy services and petroleum-based energy products increased at very gradual rates, and this was a substantial factor in allowing residential rents to rise at a slightly higher rate than inflation during the month.