Multifamily Market Sentiment Remains Positive

November 21st, 2013 by DWM Magazine

The Multifamily Production Index (MPI), released this week by the National Association of Home Builders (NAHB), reached 54 in the third quarter, seven points lower than a spike in the second quarter but the seventh consecutive reading above 50.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that any number more than 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. Although all three components fell from 2013 peaks in the second quarter, all remain above 50.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, dropped two points to 40, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.

“The multifamily industry has recovered significantly from its trough in 2009 and is getting close to reaching equilibrium,” said NAHB chief economist David Crowe. “NAHB’s forecast calls for continued improvement through 2015, but at a decreasing rate.”

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