Economic & Industry Update

June 30, 2021

Economic Indicators

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1,726 1,583 716 680 264

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May Jobs Report

Monthly Job Change Unemployment Rate

Source: U.S. Bureau of Labor Statistics

• Over half a million jobs were added in May, leaving the pandemic job deficit at 7.6 million.

• The unemployment rate slipped below 6.0% for the first time in 14 months.

• Leisure/hospitality was once again the big winner with 292,000 jobs added.

• The number of restaurant workers increased to 88% of pre-pandemic levels while hotels lagged at 75%.

Economic Indicators

• Initial claims filed the week ending June 19, 2021 were up slightly from their post-pandemic low just two weeks prior.

• Continuing claims reached their lowest level since February 2020 at 3.4 million.

• Ten states ended expanded unemployment benefits last week so we expect regional variations to be more pronounced in the coming months.

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Unemployment Claims(Week Ending June 19, 2021, Seasonally Adjusted)

Initial Claims Continuing Claims

Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from FRED, Federal Reserve Bank of St. Louis; June29, 2021

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University of Michigan Consumer Sentiment Index

Source: University of Michigan, June 25, 2021

• June consumer sentiment increased 2.6 points to 85.5.

• The component measuring expectations increased 4.7 points, mainly among households with incomes above $100,000.

• Inflation expectations tempered somewhat as consumers feel price increases will be mostly temporary.

06/2021

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NFIB Small Business Optimism Index

Source: National Federation of Independent Businesses; Moody’s Analytics

• The Small Business Optimism Index was largely unchanged at 99.6 points.

• Labor constraints were notable, with May marking the fourth consecutive month that unfilled job openings reached record highs.

• The net percentage of owners increasing prices rose 4 points to 40%, the highest level since 1981 and fueling more concerns about inflationary pressures.

05/2021

Economic Indicators

• The Back to Normal Index tracks twelve high frequency data series plus monthly employment figures, using February 29, 2020 as the baseline for “normal.”

• The index remained above 90 for the past 2+ weeks, and the level of economic activity is now only 6.3% below normal.

• The number of seated diners as well as passenger air travel were at their highest levels while the number of states surpassing 100 continued to grow.

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Back to Normal IndexFeb 29 2020=100, Not Seasonally Adjusted

Sources: CNN Business, Moody’s Analytics

6/23/21

Economic Indicators

Economic Indicators

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S&P/CoreLogic Case-Shiller 20-City Composite Home Price Index

Source: S&P Dow Jones Indices LLC, S&P/Case-Shiller 20-City Composite Home Price Index, retrieved from FRED, Federal Reserve Bank of St. Louis; June 30, 2021

• The S&P/CoreLogic Case-Shiller 20-City Composite Home Price increased 14.9% in April, the largest increase since the end of 2005.

• Phoenix, San Diego and Seattle remained on top, each experiencing year-over-year price increases in excess of 20%.

04/21

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New Home Sales

Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Residential Sales, June 23, 2021

• New home sales decreased once again in May while three prior months were revised downward by 108,000 units combined.

• Supply-side constraints remained a significant factor but signs of weakness on the demand side are beginning to emerge in buyer traffic and mortgage applications data.

05/21

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NAHB/Wells Fargo Housing Market Index

Source: NAHB/Wells Fargo Housing Market Index, June 15, 2021

• Homebuilder confidence dropped to 81 in June, with all three components (buyer traffic, current sales, prospective sales) dropping by 2 points each.

• The persistently high costs of materials and labor, along with supply-chain constraints, has begun to impact appraisals, resulting in financing challenges for some builders.

06/2021

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Housing Permits

Single-family Multifamily

Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Residential Construction, June 16, 2021

• Single-family and multifamily permitting activity dropped this month but was up 51% and 9%, respectively, from year-ago levels.

• Total permitting activity was strong across all regions, with the highest gains made in the West and Northeast.

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Housing Starts

Single-family Multifamily

• Despite the many challenges in the construction industry, housing starts were strong in May, up on a monthly and yearly basis for both property sectors.

• The 2021 monthly average for multifamily starts, 439,000 units, is outpacing monthly averages in 2019 and 2020.

05/21

Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Residential Construction, June 16, 2021

Economic Indicators

Apartment Industry Indicators

• Rents increased by 2.5% year-over-year in May, nearly reaching rent growth rates in March 2020.

• Month-to-month rents grew $12 in May to $1,428; the largest one-month increase in Yardi Matrix’s data history.

• Many metros have recovered and surpassed pre-pandemic rent growth numbers.

Source: National Multifamily Report May 2021 by Yardi Matrix

10.2% 9.6%8.3% 8.3%

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May 2021 Top/Bottom Markets(Year-Over-Year Rent Growth)

Apartment Industry Indicators• Leasing traffic volume in May 2021 was 45% above the 2019 baseline, while also substantially

eclipsing any month of summer 2020.• New lease pricing has also stabilized, up 7% from a 2020 low, and even up 3% as compared to 2019.• Concessions usage continues to normalize toward pre-pandemic levels.• The gap between move-in and move-out volumes continues to favor move-ins, as occupancy

continues to tighten.• Popularity continued in one- and two-bedroom units, continuing the reversal of the trend of last

summer for 3-bedroom units. Notably, studio units are also picking up velocity.• Credit card payments seem to have normalized at roughly 25-28% of payment volumes, down from

summer 2020 peaks.

Source: Impact of COVID-19 on Multifamily: January-May 2021 by MRI Software

Apartment Industry Indicators• 66% of renters say that renting fits their current lifestyle more than owning a home, while 33% say that

the COVID-19 pandemic has made them motivated to buy a home and stop renting.• 21% of renters plan to stop renting and purchase a home after the COVID-19 pandemic is over. As

many as 60% say that in the next three years, they hope to stop renting and own a home.• The top reason for renters to move during the last year was the cost of rent (27%), followed by

needing more space (24%),• Of those who’ve moved in the last year, 33% said their move this past year is short-term, with 61%

stating that it will last more than a year.• Because of the pandemic, 47% of renters switched to month-to-month payments.• 14% of Gen Z’s reported that they moved back in with parents last year, compared to only 4% of

Millennials.• 20% of Gen Z renters moved from a rural/suburban area into a larger city, possibly taking advantage

of lower prices caused by COVID.

Source: Renters on the Move: Survey Studies Renter Behaviors During a Landmark Year, Entrata, June 2021