Conditions Improving for Multi-Family Housing

Washington, DC, March 11, 2011 -- Two quarterly indices produced by the National Association of Home Builders indicate a return to healthy market conditions for both new and existing apartments and condominiums, the group said.
 
The Multifamily Production Index, which tracks developer sentiment about new construction on a scale of 1 to 100, is at 40.8, up more than 5 points since the previous quarter and the highest number since the fourth quarter of 2006.
 
The MPI component tracking developers’ perception of market-rate rental properties is at 51.7, the first time this component of the index has been above 50 since the second quarter of 2007.
 
Numbers over 50 indicate improving conditions.
 
The Multifamily Vacancy Index declined to 33.3, which is the smallest number since the third quarter of 2006 and half of what it was a year and a half ago. Smaller numbers indicate fewer vacancies.
 
“The renewed optimism evident in this index indicates that developers are beginning to increase production in order to meet pent-up demand,” said NAHB Chief Economist David Crowe.

“However, the lack of construction financing constrains their ability to do so at levels sufficient to meet that demand.”
 
However, NAHB said that the lack of adequate new supply will put inflationary pressure on apartment rents for the next few years.