Multifamily housing index has biggest quarterly gain in five years

The multifamily housing market continued to show improvement in the second quarter of 2011, as the Multifamily Production Index (MPI) compiled by the National Association of Home Builders (NAHB) increased for the fourth consecutive quarter.

The MPI rose from 41.7 in the first quarter of the year to 44.4 in the second quarter. It is the highest quarterly reading since 2006, and continues the trend of generally improving conditions in the market for new multifamily housing that has emerged since the MPI dropped to a record low of 16.0 in the third quarter of 2008.

The index provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, construction of market-rate-rent units, and construction of "for sale" units. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the second quarter of 2011, a majority of developers saw improvements in the production of low-rent and market-rate units.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, increased slightly from 35.0 in the first quarter of 2011 to 36.1 in the second quarter. With the MVI, lower numbers indicate fewer vacancies. Crowe noted that recent small increases in the MVI follow an extended period of improvement, and over the past three quarters the MVI has been lower than at any time since the second quarter of 2007. Crowe also noted that multifamily developers and property owners expect vacancy rates to decline over the next six months.

For more information: www.nahb.org/news_details.aspx?newsID=13438