NAHB: Apartment/Condo Market Still Strong After 1Q Correction
Jun 6, 2013
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The first quarter of 2013 saw a two-point drop to stand at 52 in the Multifamily Production Index (MPI) from the National Association of Home Builders (NAHB), but remained above 50 for the fifth consecutive quarter. The MPI is a measure of builder and developer sentiment about current conditions in the apartment and condo market.
The MPI component that tracks builder and developer perceptions of market-rate rental properties was down four points to 61 in the first quarter of 2013. NAHB notes, however, that the index component has been over 60 for seven quarter running, the longest run for this measurement since the index began being tracked in 2003.
"The apartment sector overall has largely recovered since the downturn, so we have now reached a level of development that is close to equilibrium and can continue at this pace," said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, CA, and chairman of NAHB's Multifamily Leadership Board. "With that said, there are still certain markets around the country that have room to grow."
The Multifamily Vacancy Index (MVI), measuring the multifamily housing industry's perception of vacancies, was up seven points to 38. Lower MVI readings indicate fewer vacancies. The index peaked at 70 in the second quarter of 2009, improved consistently through 2010, and stayed at a fairly moderate level throughout 2011 and 2012.
"The multifamily market has recovered substantially since the end of 2010, and is well on its way to reaching a sustainable level," said NAHB Chief Economist David Crowe. "However, there are still issues facing builders and developers that could have an impact on future production, such as a shortage of labor with basic construction skills and rising prices for some building materials."
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