The Multifamily Production Index (MPI) from the National Association of Home Builders (NAHB) remained steady at an index level of 52 in the third quarter of 2012, making it the third consecutive quarter with a reading over 50. The MPI, which measures builder and developer sentiment about current conditions in the apartment and condo market, was essentially unchanged, moving from 54 in 2Q 2012 to 52 in 3Q.
The MPI is a composite measure of three components of the multifamily housing market: construction of low-rent units, market-rate rental units, and condos ("for-sale" units). Any components index over 50 means that more respondents see conditions are improving than those who see it getting worse.
In 3Q 2012, the MPI component that tracks builder and developer perceptions of market-rate rental properties was at 69. It has been above 60 for five consecutive quarters - the longest sustained period of strength since the index began in 2003. For-sale units was at its highest point since the fourth quarter of 2005, at 44. Low-rent units dropped 15 points to 46.
"The market-rate apartment and condo markets continue to improve as household formations generate demand," said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, CA, and chairman of NAHB's Multifamily Leadership Board. "As young households find sustainable employment, most are renting in new apartment communities."
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, dropped three points 33. Lower MVI numbers indicate fewer vacancies. The MVI peaked at 70 in second quarter 2009, declined consistently in 2010, and has been at a fairly low level throughout 2011 and 2012.
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