The National Association of Home Builder’s (NAHB) Multifamily Production Index increased yet again in the second quarter of 2012, rising to 54 from 51 in the first quarter.
A leading measure of builder and developer sentiment on the apartment and condominium market, the Multifamily Production Index has now risen in eight consecutive quarters, and is at its highest level since the second quarter of 2005.
Multifamily Production Index – Sign o’ the Times
Other findings from NAHB included:
- The MPI tracks three different markets in the multifamily housing sector: low-rent units, market-rate rental units and for-sale units.
- For-sale units, which cover condos, was at 41, which it is highest reading since the fourth quarter of 2005.
- By comparison, market-rate rental properties reached an index level of 63, and low-rent units hit 61, an all-time high.
Of course, those increases in the Multifamily Production Index further confirm what many real estate professionals have known for the last year – with the single-family housing market still reeling from the housing boom (though it is showing definite signs of improvement), demand for multifamily residential housing has risen dramatically.
Further Support From Multifamily Vacancy Index
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, was also indicative of this trend. Peaking at 70 in the second quarter of 2009, multifamily housing demand has pushed the MVI lower and lower since, and it has hovered around 35 and 36 in every quarter since 2011 (it was 36 in 2012’s second quarter).
David Crowe, the NAHB’s chief economist, said the latest Multifamily Production Index suggests further growth in the multifamily market, a conclusion that is consistent with similar studies.
“The strength of the MPI suggests that multifamily production is likely to increase somewhat going forward,” Crowe said. “Multifamily production has already recovered substantially from a historic low of about 110,000 starts a year in 2009 and 2010 to the current annual rate of a little over 200,000.”