U.S. Multifamily Remains Bright Spot on Housing Market
Dec 13, 2011
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The apartment and condominium housing market improved of the fifth consecutive quarter, according to the Multifamily Production Index (MPI) from the National Association of Home Builders (NAHB).
The MPI tracks the sentiment of builders and developers about the multifamily market on a scale of 0 to 100, with a number over 50 indicating that more respondents see conditions improving than report conditions are worsening.
The MPI increased from 44.4 in the second quarter of 2011 to 47.3 in the third quarter of 2011 – the highest the index has reached since the fourth quarter of 2005.
The index's three components and their 3Q 2011 levels:
• builder and developer perceptions of market-rate rental properties recorded an all-time high of 63.8
• low-rent units remained steady at 50.1
• for-sale units rose to 31.9, the highest recording since the second quarter of 2006
“Multifamily construction continues to be the bright spot in the overall housing market,” said NAHB Chief Economist David Crowe. “While household formations have been below trend, those who are forming new households are becoming renters and this trend is likely to continue until consumers’ confidence returns.”
“Apartments and condominiums play an integral role in the overall housing market, now more than ever,” said Stillman Knight, chairman of NAHB’s Multifamily Council Board of Trustees and president and CEO of the Knight Company of Alexandria, VA. “The construction of these units not only brings jobs to local communities, but also provides an adequate stock of housing for areas with rapid population growth.”
Expectations for the next six months improved in the third quarter for market-rate rental properties, up to 67.2, and for-sale properties, up to 37.3, respectively. Expectations for low-rent units decreased slightly, to 50.2.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, decreased from 36.1 in 2Q 2011 to 35.1 in 3Q 2011. Lower numbers in the MVI indicate fewer vacancies. The MVI has improved considerably since peaking at 70.2 in 2Q 2009.
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